David Lynch, bolttech

Insurtech: Six tech predictions for the insurance sector in 2024

David Lynch, bolttech

January 11 2024

2023 was undoubtedly the year artificial intelligence (AI) went mainstream in the insurance industry. Many leaders are now entering 2024 with high, and potentially inflated, expectations on the potential of AI to ignite an era of accelerated technology led change.

Fintechs are seizing the moment, finding ways to bring value to traditional insurers. Insurers are making their own investments and increasing the velocity of experiments to stay ahead of the competition from emerging AI-centric competitors.

Industry players have even more compelling reasons to collaborate, and to partner with cutting edge AI companies and big tech to win in the new data-driven, AI-powered world. Here are six trends to watch as we transition into 2024:

AI “everything, everywhere all at once”. There is no better framing to describe the impact of AI than referencing this independent American movie title. Every single facet of the insurance value chain is about to be re-imagined by AI, with only a question of when and how fast it takes place. In 2024 and beyond, insurance companies will further automate claims, drive higher customer engagement, and augment their workforce and agents with AI capabilities. This will be fuelled by new real-time data streams to make better, more informed underwriting and pricing decisions. Firms that can orchestrate AI will also be able to deliver AI-centric products and services that can continuously adapt and improve over time.

Redefining the value chain. Imagine starting 2024 in a world without the insurance industry, but having the AI capabilities we have today at our fingertips? Would we be developing solutions to address the protection needs of customers in the same way the industry operates today? Likely not. Addressing customer’s needs gives rise to new possibilities when armed with AI. This will, however, create a conundrum for insurance carriers. As AI evolves, customer protection needs will become more holistic and evolve beyond insurance as a result of the way the technology is able to support risk management.

Prediction and prevention become the new frontier. The insurance industry has always had a retrospective approach, leveraging historical data to perform trends analysis, and to develop pricing and underwriting models that maintain financial stability. But as we find ourselves in an AI-enabled world in 2024, the convergence of massive volumes of unstructured data from IoT, sensors, and wearable tech will lead to a “shift left” epiphany for the industry. Similar to the paradigm shift seen in the software industry to prioritise testing and quality control earlier in the development process, insurers and insurtechs are poised to become as obsessed with prediction, prevention and detection as they are today about claims.

Real-time product constructs and features. The surge in availability and relevance of real-time data, combined with the ability of AI to process this and extract valuable insights, will transform the way insurance products are delivered. The industry has been slow in utilising real-time data in the development of products and features but as the ability to predict and detect adverse events increases, the capability to prevent those events from ever occurring will become a real possibility. Speed is of the essence in prevention and the availability of this real-time data combined with AI will accelerate the industry’s ability to drastically reduce losses over time – a win for both customers and insurance carriers.

Recovery as an integral part of the product proposition. ‘Insurance’ is commonly defined as “a means of protection from financial loss”, with ‘protection’ defined as “any measure taken to guard a thing against damage caused by outside forces”. ‘Recovery’, which is often perceived as a concept for post-loss, falls outside of these definitions, yet insurance has long been synonymous with extending financial support to assist in the recovery process. This creates additional considerations for insurers – which of these recovery services to build on their own and which can they partner to deliver. As we enter 2024, the availability of APIs for nearly every business function suggests that recovery will be an even more critical element of product propositions going forward.

Generative AI: the frontier for revolutionising customer experience. With the explosion of interest in generative AI, exemplified by the launch of ChatGPT and the wider availability of proprietary and open source large language models, use cases for this technology have emerged rapidly. Customer service is one of the most widely discussed domains, with generative AI predicted to improve almost all aspects of a customer’s journey. Generative AI is set to change the way customers interact with insurance and protection, redirecting away from static policies and renewals, towards greater interaction, education, nudges and real-time suggestions and support, built off deep specialist training in each product vertical or risk domain.

Looking ahead, as the insurance industry continues to innovate, there is no question that insurtechs will need to compete on the speed and ease of integrating and embedding their AI-driven protection products and services into both traditional and new distribution channels.

This article iswritten by David Lynch, Group Chief Technology Officer, bolttech.  Lynch is based in Melbourne. 

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