Digital transformation in the insurance industry: innovation revolutionizes business model

Technological innovations are transforming the relationship between insurers and their customers. More connected, well informed and engaged, the traditional sector is aware of changes in consumer behavior.

In order to meet new demands and be updated in a competitive market, companies are increasingly investing in digital solutions, with mobile devices, Internet of Things, Telemetry, among others.

The new consumer places high expectations on the products offered by insurers, which demands a combination of speed, transparency, convenience and technology. These preferences are important for insurers to rethink the market and develop innovative product and service offerings.

Digital transformation redesigns insurance strategies

The tasks of measuring, controlling and assessing risks are being transformed by the digital environment, and the leading insurance market leaders are aware of this. During the 27th edition of CIAB Febraban in June, 2018, Alexandre Leal, technical executive superintendent of the National Confederation of Insurers (CNseg), discussed the industry’s enthusiasm for promoting innovation through new technologies.

“The crisis has cooled down the pace of industry growth, but not its enthusiasm for innovation. In 2016, the market revenue had a real increase of 4%, surpassing R$ 400 billion, of which R$ 285 billion returned to customers in the form of indemnities, redemption of capitalization and withdrawals in pension plans. Technical provisions totaled R$ 820 billion and assets exceeded, for the first time, R$ 1 trillion, “says Leal.

A study conducted by the Harvard Business Review, called “Operationalizing Digital Transformation: New Insights Into Making Digital Transformation Work”, pointed out that 43% of surveyed companies, in different sectors, are achieving positive results with their investments in digital transformation.

New technologies revolutionize the customer experience

According to Gartner, by 2020, 20.8 billion devices are expected to be connected to the Internet. In 2016, the forecast was 5.5 million new “things” becoming, daily connected. This trend will have far-reaching implications for home, health and automobile insurance.

Internet of Things is a network of devices that collects, monitors and shares information over the Internet. These intelligent connected can include different objects related to the insurance industry, in the automotive sector, home security systems and even health plans.

Here are some examples of technological applications that have transformed the relationship between insurers and their customers and their advantages:

Internet of Things (IoT) and Analytics

For insured

In automative insurance, for example, telemetry devices can be installed in vehicles and send the collected data to insurers. After the analysis, it is possible to offer discount to good drivers, besides reducing the risks of accidents and minimize fraud and accidents.

In residential insurance, smartphones linked to sensors installed in the house allow the user to control alarms remotely and monitor the movement of people in the place. This provides more security to the owner, reducing the possibility of theft and break-ins and allowing greater visibility into other risks to property.

In life insurance, biometric sensors and smartwatches can monitor data such as heart rate, blood pressure, among other data about the user’s vital signs, providing personalized information, encouraging better health habits. The insurer may still offer discounts on services that fit the insured’s profile, for example, seniors living alone, new parents, among others.

For insurers

Capturing customer information and analyzing these data identifies risks in certain profiles, optimize the price of the product, find out what new risks arise when crossing data, detect and reduce fraud, and generate insights about safety, health and daily habits of the insured.

Artificial intelligence

For insured

It allows agility and assertiveness in care and makes services more personalized and proactive.

For insurers

It facilitates the automation of processes, such as smarter chatbots, the use of drones for the recognition of damage in catastrophic areas or property evaluations, in order to avoid fraud in claims in addition to supporting the interaction between company departments, from process analysis to survey the losses to the client in various situations, such as in an accident.

Mobile

For insured

They may have gadgets that facilitate the service in the contact channels with the insurer and support the quality of life of the users. Apps prevent and provide guidance on good eating habits and physical exercise, can also monitor babies sleep to prevent sudden death from apnea.

For insurers

It concentrates apps that aim to support the insured quality of life, improving eating habits and encouraging physical exercise, preventing diseases.

Investment in digital transformation provides:

• Improved insurance contracting experience;
• Attracting new consumers to the market;
• Maintenance of competitive advantage;
• Stimulating the development of increasingly innovative services;
• Positive change of public view

This is the right time for the insurance industry to print a global view on trends in innovation, engaging old customers and capturing new users for their services.