Now is the time for insurers to step up their game regarding innovation, quality, and pace. Businesses understand the value of innovation in accelerating transformation. Insurance will continue to play a critical role in the financial health and resiliency of companies and economies in a world teeming with new opportunities and risks.
Insurance provides financial safety and stability to all enterprises and the modern economy, especially during times of disruption. Various threats can jeopardize a company’s financial sustainability and existence, and insurance can help lessen those risks by making financial repercussions more predictable and survivable. Commercial insurance is an integral part of the risk management strategies of enterprises and the C-suite.
However, an enormous change has occurred in the last decade in terms of technological advancement and an apparent increase in risk and disruption. The risk of business interruption has taken on a new dimension due to the global pandemic. Remote work and increased digitization of commerce have led to a rise in cyber-attacks, and the growth of social media has heightened the risk of reputational damage to businesses. In addition, the rising expense of legal settlements has increased litigation risks.
Risks are becoming more common, more severe, and more diverse. Insurance policies, technologies, and practices must evolve to meet these difficulties. And that’s exactly what’s happening at major insurance companies, mainly behind the scenes.
Moving to the Cloud to Improve Agility
For policy underwriting, billing, or claims, insurers are increasingly turning to cloud-based technologies. Cloud technologies allow them to respond to operational or market changes more rapidly and efficiently.
Cloud solutions are more agile, allowing business users to make changes more quickly and, in some situations, without the intervention of IT. Cloud systems are also updated, with features and fixes made available without needing a system upgrade. Cloud solutions can also speed up innovation by allowing for rapid deployments to support new products or market launches, allowing insurers to respond more quickly to changing business needs.
Using Prescriptive Analytics and Risk Models
As the future appears to be riskier than in the past, increased agility will be required. Pandemic, cyber-threats and geopolitical conflicts all pose substantial threats.
New and innovative predictive analytics and risk modeling approaches are required to address new threats and estimate potential losses. Because emerging risks lack trended historical data, insurers have been pushed to innovate, particularly in modeling techniques and finding new external data sources to predict future losses.
Some insurers aim to operationalize analytic insights into their fundamental business workflows to improve decision-making, modeling techniques, and new data sources. Insurance companies that move from prediction to prescription can close the data loop and maximize the value of their analytics and data investments.
Adapt and Innovate with Insurtech
Those who adapt and innovate as legacy business and technology models are disrupted will be more likely to uncover new growth possibilities.
Innovation is required to meet future challenges, and insurtech is leading the way. According to the Grand View Research report “Insurtech Market Size, Share & Trends Analysis Report, 2022 – 2030,” insurtech is one of the hottest growth industries, with revenues forecasted to double in the next five years and a predicted annual growth rate of 52 percent through 2030.
However, combing through the possibilities and choosing the right partners for innovation is a big challenge when there are hundreds of companies and ideas to consider. Insurers benefit from cloud-based core systems because they can quickly and easily integrate and test new insurtech applications and data. In addition, an insurtech ecosystem or a qualified consulting partner can speed up the screening process, providing a significant competitive advantage at such an opportune and disruptive time in the industry.
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