The insurance industry is fiercely competitive, with companies vying for a share of the consumer market. Although there are just under 6,000 insurance companies across the US, the industry contributes 2.9% of the country’s GDP. In recent years, technological innovations have powered the rise of insurance technology (insurtech) companies, which utilize cutting-edge digital solutions to provide more efficient and creative insurance products and services.

Driven by changes in customer expectations, the growth of digital channels, and accessibility of data and analytics, this has added an additional, tech-centric layer of competition to the industry, with these startups disrupting the traditional insurance model. Faced with a current landscape of economic uncertainties, rising costs, and increased competition, businesses are tasked with doing more with less, while remaining competitive

Insurance companies have always been looking for ways to attract and retain customers, but today that is taking on added urgency and intensity. Fortunately, there are a set of strategies that can be implemented to not only gain customers but build brand loyalty.

One of the most common approaches is to offer competitive pricing. Using data and analytics, insurers can assess risk and set low premiums while still being sustainably profitable. This can be a key differentiator because it can be difficult for insurance companies to compete on price if they lack the same advanced data and analytics.

In addition to leveraging data and analytics to offer better pricing, it’s also used to identify suspicious trends and behavior that may indicate fraudulent activity. According to the Coalition Against Insurance Fraud, fraud costs businesses and consumers $309 billion each year. Using data and analytics can help insurers minimize the cost of claims as well as improving the general efficiency of business operations.

Insurance companies are also winning over consumers through the adoption of technology. Many have developed and launched mobile apps and other digital tools to make it easier for customers to purchase policies, file claims, and access support. This can be particularly appealing to younger consumers given their greater usage of digital channels – but also older generations who are increasingly using digital channels and touch points brought on by the experience during the pandemic.

However, the insurance industry still has a long way to go to be digitally mature. In one Forbes survey, insurers and brokers in the US revealed that just 11.5% of new policies are completed using a mobile app. With these strategies in mind, here are some of the key trends in insurance technology that are worth paying attention to in 2023 and beyond:

1. Digitalization of the insurance value chain

Insurtech companies are leveraging technology to streamline and digitize various aspects of the insurance value chain, including underwriting, claims processing, and distribution. This allows for faster and more efficient service, as well as the ability to offer new products and services.

By using digital technologies, the average insurance company can lower costs by almost 30% in a 5-year period, according to research by Bain & Company, with the deepest area of savings coming from claims management.

2. Increasing use of data and analytics

The insurance industry is increasingly investing in and using data and analytics to better understand and predict risk. This includes the use of telematics in car insurance, which uses data from a device installed in the vehicle to track driving behavior and provide personalized premiums that are based on that data.

As a snapshot of deeper data usage, the global insurance analytics market size is set to grow from $9.2 billion in 2022 to $28.1 billion in 2029 – a compound annual growth rate of 14.8%.

3. More insurtech partnerships and collaborations

Many insurers are partnering with or investing in insurtech startups to access new technologies and business models. This allows traditional insurers to benefit from the agility and innovation of startups, while also providing a way for startups to access the resources and expertise of established players.

Some of the big insurtech partnerships of the past year include:

• Zurich and Flood InsurTech Previsico to increase flood risk resilience
• Root Insurance and Tractable in a bid to bolster claims operations
• Air Doctor and Ok Away to allow customers to access local doctors

4. Enhancing customer experiences

Insurtech companies are using technology to focus on enhancing the customer experience. This includes being present across multiple digital channels, such as mobile apps, for policy purchase and management, as well as the use of chatbots and other AI tools to provide quick and convenient customer support.

For insurers that can power personalized digital journeys to their customers, they are seeing retention rates of 81%. Companies that deliver seamless digital journeys across all digital platforms are also more likely to attract new customers and strengthen their reputation with current customers.

5. Proliferation of microinsurance

Microinsurance is being tailored to the specific needs and budgets of small businesses and low-income individuals. Insurtech companies are using technology to make it easier to offer microinsurance, which can help to increase financial inclusion and protect against financial shocks.

Between 179 and 377 million people are currently covered by a microinsurance product across 30 countries, according to The Landscape of Microinsurance report. The impact of the pandemic plus the technological adoption by insurers is fueling more growth and coverage of microinsurance.

6. Increasing importance of marketing and branding

Beyond updating these tactics and following these trends, insurance companies are carving out a competitive edge through marketing and branding.

This includes the use of traditional advertising in addition to more modern techniques that have in mind social media marketing and influencer partnerships. The goal of these techniques is to create a stronger brand identity and double down on differentiating themselves

Insurance companies are making use of social media and other digital channels to reach out and engage with consumers, understanding that two-way, interactive communication between company and customer has superseded the old model of one-way, company-to-customer communication.

This can include the use of influencer marketing, where companies partner with popular social media personalities to promote their products. It also involves creating more engaging content in the form of blog posts and videos.

The lines in the battleground for customers

The fight for the consumer in the insurance industry is intense. Companies are constantly looking for ways to stand out from the competition. Looking at this year and beyond, we’re seeing that insurers are paying particular attention to utilizing digital technologies to differentiate themselves and win over customers.

Are you looking to use current insurance trends to gain a competitive edge? Or looking to use the current landscape to update your business strategy? Connect with us.

Argano works with leading insurance companies to help transform their customer service into a revenue driver.

Interested in learning more about the technology trends shaping the future of insurance? Check out this industry webinar: From Data to Customer Experience – How Digitization is Shaping the Insurance Industry.