Application Of Digital Solutions In Insurance Industry

There is no denying anymore that prices have jumped significantly in almost every sector of the economy. This leads to a snowball effect in many ways. When the costs are increasing, firms have to raise their prices just to catch up with the costs they are incurring. The situation would be out of control when the companies cannot take the losses anymore and want to get back to profitability.

Insurance is one of those sectors that have been patient throughout the pandemic and economic tough times. They have to get back to profitability as soon as possible. According to cheapautoinsurance.net, investments are falling in both existing insurance companies and start-ups because of the tough few years with losses. In the current economic environment, more and more investors would be looking for companies that pay dividends now to help them weather the stock market declines better.

Increasing Costs Are The Main Motivator

Especially auto insurance claims have been increasing. This problem has been exaggerated by the increasing repair costs due to labor and part price increases. There are plenty of shortages all over the place that doesn’t help either. Furthermore, used-car prices have gone up 40% within the last year. That means, carriers cannot total a vehicle easily either.

Both totaling and choosing to repair are equally expensive. Add the increased claim number to that and you have a real problem that results in extreme reactions in the industry as we see. Insurance companies are forced to a corner where they may not care anymore about losing a few customers. That would mean they would push their prices as far as they can. They would push it even harder for higher-risk drivers with low incomes and living in more dangerous zip codes.

How Digital Solutions Help Insurance Companies

One highly promising recent development is the popularity of digital channels among motorists. Recent surveys suggest that consumers prefer the websites of their carriers to agents. The sites have surpassed the agents in 2020 and the situation is probably more skewed towards them after the covid. People had to try communicating with their providers digitally and end up liking it.

Not only do they prefer using websites for basic communications but also, they use them for complicated needs like claims. Even more, interestingly, they are more satisfied when they use online rather than telephone and face-to-face channels. This is music to car insurance company CEOs who are very keen to move more of their functions to digital platforms.

About ¾ of CEOs are in favor of investing in innovative solutions afforded by artificial intelligence, machine learning, cloud computing, big data, and blockchain. It was highly cost-effective to move their sales and customer service online afforded by improved website capabilities, encryption, and security. They now need to move on to other areas. Failing to adapt will be painful for them and their customers in several ways.

New Technologies In The Pipeline

One area they are known to be very keen on is big data. It has huge implications in every aspect of the insurance business. Having or buying large data means nothing if you cannot figure out how to make sense of it. Once it is sifted through it offers plenty of insights into customer behaviours like policy take-ups, switching, and getting competitive quotes. Knowing how your customers will react in certain circumstances is priceless, especially if you have millions of them.

The best part of it is that once they figure out how to handle information, they can use the information they gathered over the years internally. They are already using artificial intelligence in claims. They really need to use more of it to reduce costs so that they can refrain from increasing insurance rates.

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