The insurance industry is facing a range of challenges, from rising claims costs to the need for modernization. Inflation, changing risk profiles, and a shortage of insurtech talent are among the biggest challenges facing the industry, while customer experience and digitization have become critical issues due to the pandemic.
As carriers and insurers adapt to new ways of doing business, they must accelerate their use of new technologies, such as machine learning and telematics, to gain a competitive advantage.
In this article, we will examine five key insurance industry challenges that companies will face in the next years and explore strategies for overcoming them.
1. Shortage of Insurtech Talent
Insurtech is, as defined by Salesforce, “any new insurance technology that helps to uplevel aging systems and propel digital innovation.” Insurtech is playing an increasingly important role in the insurance industry, with companies using it to drive innovation, reduce costs, and improve customer experience. However, there is a chronic shortage of insurtech talent, which is making it difficult for companies to take full advantage of these technologies.
To address this challenge, carriers and insurers must identify new ways to attract and retain insurtech talent. One strategy is to embed insurtech expertise into existing teams or outsource the work to third-party insurtech providers. Additionally, companies can leverage new technologies such as machine learning and analytics to create new features and services that will appeal to insurtech talent.
By proactively addressing the insurtech talent shortage, companies can maintain their competitiveness and enhance their profitability in the insurance market.
2. Legacy Systems and Modernization
Many insurance companies still rely on legacy systems that are outdated and unable to keep up with industry trends. These systems can be expensive to maintain and prevent carriers from taking full advantage of new technologies. The result is a lack of competitiveness and a struggle to attract new customers.
To overcome this challenge, insurers must accelerate their digital transformation and move towards more modern systems. This includes investing in new technologies such as cloud computing and analytics, which can help carriers to streamline operations, reduce costs, and improve customer experience.
Another approach is to use startups and insurtech to develop new business models and products that can be integrated with existing systems. By modernizing their infrastructure, insurers can take advantage of new opportunities and stay competitive in the marketplace.
3. Changing Risk Profiles
Insurance companies are facing changing risk profiles due to factors such as climate-related risks, wildfire, and weather events. These risks can result in increased claims costs and a rise in insurance rates, which can lead to decreased competitiveness and customer dissatisfaction.
To address this challenge, insurers must identify new ways to underwrite and manage risk. One strategy is to use telematics and usage-based insurance (UBI) to analyze driving behavior and identify high-risk drivers. Using UBI can help insurers to better price their policies and reduce claims costs.
In addition, carriers can leverage analytics to identify new market segments and attract underserved customers. By offering innovative products and services that meet changing risk profiles, insurers can maintain their competitiveness and differentiate themselves in the marketplace.
4. Customer Experience and Digitization
The pandemic has highlighted the importance of digital transformation and customer experience in the insurance industry. Customers now expect digital platforms that allow them to purchase policies, file claims, and interact with their carriers. However, many insurers still rely on outdated systems that cannot keep up with these demands.
To address this challenge, carriers must accelerate their digitization efforts and invest in new technologies such as machine learning and analytics. Doing so can help insurers to create a more personalized customer experience and attract and retain new customers.
Furthermore, insurers can differentiate themselves by offering new features and services that leverage these technologies, such as real-time claims processing and customer self-service portals. By prioritizing customer experience and digitization, carriers can stay competitive and grow their market share in the insurance industry.
5. Inflation and Rising Claims Costs
Inflation and rising claims costs are significant challenges facing the insurance industry. As the cost-of-living crisis continues, customers have less disposable income to spend on insurance, making it difficult for carriers to maintain their profitability. Additionally, weather events and other factors have led to increased claims costs, which can impact carrier profitability.
To address this challenge, insurers may need to increase their prices and identify new ways to manage loss costs. This can include outsourcing or partnering with third-party providers to reduce expenses and improve operational efficiency.
Another approach is to embed analytics into the claims process to help identify fraudulent activity and improve overall claims management. By proactively addressing inflation and rising claims costs, insurers can maintain their profitability and provide sustainable insurance products and services.
DrKumo Remote Patient Monitoring for Quality, Cost-Effective Care
As the insurance industry continues to face challenges such as rising healthcare costs and changing risk profiles, innovative solutions are needed to address these issues. One such solution is the use of remote patient monitoring (RPM), a technology that allows patients to manage their health conditions in the comfort of their homes while providing healthcare providers with real-time intelligence for timely intervention. DrKumo is a technology leader in highly scalable, continuous, real-time RPM solutions for chronic disease management, acute care, post-operation, and hospital care at home.
DrKumo is dedicated to solving the most painful problems in healthcare with its user-friendly solution powered by its state-of-the-art, HIPAA-compliant, mobile-enabled, continuous real-time monitoring, and AI/ML engine. DrKumo RPM technology not only allows patients to better manage their health conditions, but it also supports healthcare providers in reducing healthcare costs and improving patient outcomes.
With a culture that is innovative, collaborative, and technology-driven, we provide the most effective solutions to both patients and healthcare providers. DrKumo RPM technology enables healthcare providers to offer continuous, high-quality care to patients, regardless of their location. This incredible flexibility allows patients to remain at home, reducing hospital admissions and readmissions, ultimately leading to a reduction in healthcare costs.
The insurance industry faces significant challenges such as a shortage of insurtech talent, legacy systems, changing risk profiles, customer experience, inflation, and rising claims costs. However, by proactively addressing these challenges and leveraging new technologies and strategies, insurers can maintain their competitiveness and meet the evolving needs of their customers. As the industry continues to be disrupted by new entrants and market segments, it is essential that insurers identify and address these challenges to remain relevant and profitable in the years ahead.
Take the first step towards revolutionizing the way healthcare is accessed and managed. Contact DrKumo now.