Tech is transforming just about every industry under the sun, and the insurance sector is no exception — even if it’s been slow to adapt so far.
As a result, financial advisors that don’t keep up with changes are at risk of falling behind in the sectors and missing out on some of the best ways to help their customers and make their own jobs easier.
We’ll run through the top trends to keep your eyes on as an insurance agent in Singapore.
Artificial intelligence and its potential applications are everywhere. especially since the launch of ChatGPT.
Machine learning holds a lot of promise: The ability of machines to crunch vast amounts of data to reach its own conclusions and make predictions.
One place we’ve seen AI hit mainstream use in the financial world already is investing and saving. There are now many “robo-advisor” apps to give users tailored recommendations based on their risk preferences and investing goals based on an algorithm — something previously only possible to achieve with a personal advisor.
It’s hardly a stretch to say that the insurance world could benefit from the same idea. On one hand, this could be a threat to insurance agents with the potential to replace them — but it could also be a tool agents use to offer customer service, give generic advice, and find out more about customers.
Yet this is far from the only potential application of AI in insurance. As McKinsey points out, insurance companies already have a lot of data about claims histories, distribution interactions, and more — yet many aren’t making full use of them because it would be impossible following manual processes. Machine learning offers a way to crunch and make sense of this data, which could create more tailored products for individuals or more efficient processes behind the scenes.
Plus, machine learning could process claims, meaning that decisions could be made more quickly — instead of data having to be collected manually about what exactly happens in the event of a claim, AI would handle the process. Considering many customers are dissatisfied with how long this takes usually, the approach could be another way to boost customer satisfaction.
Automation is another of the more talked-about tech trends at the moment. AI isn’t just about machine learning, and can also involve robotic process automation (RPA), which involves programming software to handle basic tasks.
One of its biggest applications is automating time-consuming manual processes, especially those involved in internal operations. This would benefit insurance companies as a whole by freeing up resources, and it could also be something insurance agents use to automate their own tasks.
Examples of common applications are:
Automation could also be used to help digitize documents involved in the insurance process, many of which are on paper and would take too long to transfer to digital form manually.
Or, insurance agents could use automation for basic marketing services, such as sending email newsletters or posting on social media periodically.
All of this frees up time to focus on more important and mentally intense processes, such as customer service and client meetings.
The internet of things (IoT) makes it possible for data to be collected and analyzed constantly by taking it from various devices that remain connected to the internet. These include smartphones, smart watches, smart speakers, and more. Plus, the upcoming 5G rollout will make it easier than ever to collect this real-time data from devices.
This has clear implications for the insurance industry. Telematics have already become the norm for first-time drivers that want auto insurance, but the technology could also have applications in areas it hasn’t yet touched, such as for life insurance. Premiums and benefits could be tailored continuously for individuals as different risk factors emerge, allowing customers to have more tailored packages.
The use of IoT would also mean insurance companies no longer have to trust what customers say on blind faith, and can instead collect the data themselves — for instance, tracking how many steps someone does per day for health insurance. Social media could also provide information about how risk-loving someone’s personality is. This may raise ethical or privacy concerns, but more than three quarters of customers are prepared to provide this kind of personal data if it gives them access to a more favorable policy. Insurance agents would then have a much richer dataset to offer recommendations from.
This could link with the role of machine learning and automation. For instance, if someone was involved in a car accident, they could send images directly to an insurance company for a claim, and AI could process everything.
Fewer areas deal with more sensitive data than the world of insurance. But with proper trust architecture, the data involved could be analyzed to its full potential — to predict outcomes and offer better policies — without concerns about privacy or safety. Blockchain technology could be the key to fulfilling this role.
Although the blockchain is typically associated with cryptocurrencies, it ultimately involves putting data on a chain without a third party overseeing everything and while keeping the identities of everyone involved anonymous.
Smart contracts are a key technology here. They’re a decentralized way of allowing a certain transaction to take place only if both people adhere to agreed conditions. Therefore, the blockchain could be used to pass sensitive information between parties involved while keeping a policyholder anonymous. For instance, two different insurers if someone wants to change their policy, or between an insurance agent and insurance company.
This could also reduce errors and possible risks to reputation along the way, and there would be a record of the transactions for everyone to see.
Since many people are instinctively distrusting or suspicious of insurance, this kind of decentralized technology could help to put customers’ minds at ease.
Bigger companies such as those in the insurance sector tend to rely heavily on legacy technology, with 90% of insurance firms confirming that legacy software is an obstacle to them modernizing.
Thankfully, times are changing, and things are gradually shifting to the cloud. This will make it easier for financial advisors to get data directly from other parties involved in an insurance policy, such as healthcare providers, the customers, or insurance carriers. Once all information involved is taken from paper to digital form (as mentioned under the automation section), it can be digitized on the cloud and stored there for everyone to access.
This will also make it easier to process the data. For instance, professionals can look for errors or consistencies along the way.
The use of cloud technology also makes it easier to work remotely while providing collaboration, since all parties can see the same data in real-time, even as changes are made. This would make it possible for insurance agents to see clients from all kinds of locations across Singapore or the world.
Some of the concepts outlined above were only abstract concepts a few years ago, yet they’re already becoming relevant enough to make tangible differences in the lives of insurance agents — especially as the technologies interact with each other. Now is the time to start paying attention.
It’s often easier to keep up with trends and analyze their significance when you have other people to share your ideas and analyses with. Finberty is dedicated to providing no BS insights and knowledge to financial advisors. Connect with us to stay on top of the game!