How Technology Influences the Growth of Insurance Sales

Marcin Nowak
May 13, 2024

In an age where smartphones are as ubiquitous as wristwatches and virtual assistants can shop for us, it's no surprise that technology is also reshaping the once-staid realm of insurance sales. From AI-powered chatbots that provide instant policy quotes to mobile apps that let you manage coverage on the go, the insurance industry is undergoing a digital metamorphosis. 

This transformation is not just about adopting new gadgets; it's about redefining the very way insurers connect with customers, streamline operations, and drive growth. 

Join us as we explore the fascinating intersection of technology and insurance, and how it's leading to a revolution in sales and customer satisfaction.

The Digital Shift: Impact on Insurance Sales

The insurance industry is experiencing more than just a trend; it’s witnessing a game-changing digital shift. The continuous evolution of digital capabilities is revamping the insurance landscape, empowering insurers to roll out policies swiftly and secure a competitive edge in customer acquisition.

New-age value systems, facilitated by digital technology, are reshaping client relationships in the insurance sector. This digital transformation transcends the mere adoption of new technologies; it aims to amplify the customer experience. Technological innovations have led to improved customer engagement, which has a positive impact on personalized product offerings and customer retention.

The digital shift acts as the driving force behind the evolution of insurance companies and their insurance value chain.

Online Insurance Purchase

Just as shopping has moved to the digital realm, so too has insurance. Consumers now have the capability to acquire insurance through an online platform that mirrors e-commerce sites. 

54% of Americans aged 18-29, 65% of those aged 30-49, and 46% of those aged 50+ have bought insurance policies online in 2023. 49% of UK policies are sold online, with 45% in Estonia, and 39% in Ireland.

This evolution toward online accessibility represents a significant milestone for convenience within the industry, reflecting how deeply the wave of digitization has impacted the world of insurance.

AI, ML and Automation in Insurance: A Driving Force

Genpact reported that 87% of insurance brands annually invest more than $5 million in artificial intelligence technologies.

Automation is spearheading a revolution in the insurance industry, fueling operational efficiency and enriching customer self-service options. Some examples of automation in the insurance industry include:

  • Database management systems
  • Online customer acquisition platforms
  • Task automation
  • Conversational AI platforms.

These insurance technology solutions enable professionals to improve efficiency in policy sales and claims processes, leading to faster services for customers and increased operational efficiency.

Automated Underwriting

37% of life insurance underwriters noticed a decline in their ability to achieve business goals because of lack of information. 38% of them believe that inefficient systems and needless inputs hinder their ability to deliver.

40% of underwriters time is wasted on administrative, repetitive tasks, that could be automated. This time is estimated to be worth $160 billion in a five years timespan.

What's more, in life insurance industry, insurers that implemented streamlined underwriting noted a 14% increase in sales volume. For example, John Hancock with their eApp platform enabled digital process for all face values policies for all applicants under 60 years old and up to $3 million face value.

The insurance industry has seen a substantial enhancement in its underwriting process due to the advent of automation. This improvement is especially pronounced within the life insurance sector, where what once took weeks now unfolds in minutes thanks to automated underwriting systems that utilize hyperautomation for multiple functions.

  • Swiftly gathering and scrutinizing data from various sources to assess risks with high accuracy
  • Addressing inefficiencies inherent in traditional rule-based approaches
  • Cutting down on interdepartmental lags
  • Improving collaboration across the board.

Faster claims processing

Claims processing may not seem to have a direct impact on insurance policy sales. However, we need to remember that customer experience leads to client satisfaction and loyalty, thus making it more likely for the client to return for more.

According to Forbes, it is true for 90% of customers – smooth claim processing influences their loyalty.

As an example, Nordic insurance automated 70% of claims documents input, increasing their operational efficiency by a large margin.

Agent Portals

Automation is enhancing the efficiency and user-friendliness of agent portals by simplifying the underwriting process. By automating certain tasks within these portals, employees can redirect their attention to more strategic areas of business, thereby refining overall business processes.

Insurtech companies are at the forefront when it comes to improving these portals. For example, Decerto's agent portal allows agents to:

  • Automates and streamlines policy management processes, saving agents time and money
  • Provides easy access to customer data, insurance products, policy prices, and coverage terms
  • Offers robust security measures like data encryption and role-based access control to protect sensitive customer data.

AI-Powered Chatbots

The market valuation of global insurance chatbots reached $467.4 million in 2022 and is anticipated to surge to $4.5 billion by 2032, with a projected compound annual growth rate (CAGR) of 25.6%.

44% of customers find it comfortable to utilize chatbots for insurance claims, while 43% prefer using them to apply for insurance.

Through the use of conversational AI platforms that utilize natural language processing along with machine learning techniques, insurers are able to simulate conversations with human-like responsiveness, thereby boosting both client involvement and operational effectiveness.

Offering round-the-clock tailored assistance, they deliver swift responses to customer inquiries. By managing routine questions, these intelligent chatbots enable human agents to devote their attention to more complex issues.

Yet, the impact of chatbots extends beyond mere customer support. They also enhance sales in the insurance field. Chatbots aid in escalating sales figures by offering customers customized policy suggestions. 

Notable implementations of AI-based chatbots in this sector include platforms like John Hancock’s myJH that empower users with functionalities such as policy management, claim submissions, and policy tracking abilities.

Also, AA Ireland saw an 11% increase in conversion rates after implementing a chatbot, that collected initial customer data.

Customer-behavior Based Premiums with IoT

IoT devices like telematics systems in vehicles, wearables, and home sensors collect real-time data on driving habits, health parameters, property conditions etc.

This data provides insurers with granular insights into customer behavior and risk factors.

Machine learning algorithms can analyze this vast IoT data to accurately model risk profiles for each customer.

This allows insurers to price premiums dynamically based on actual usage patterns and behaviors instead of broad demographic factors.

Insurtech: Disrupting the Insurance Industry

The introduction of innovative products and the application of advanced technologies by insurtech companies are creating considerable disruptions in the insurance industry. 

Since 2012, these disruptors have garnered approximately $50 billion in investment, showcasing their rapid growth and the burgeoning interest within this sector.

Leveraging data analytics for operational enhancement and customer experience improvement, these newcomers are shaking up established markets including auto insurance with cutting-edge innovations such as telematics. 

They’re entering strategic alliances with conventional insurers—for instance, the collaboration between Allstate and Lemonade—aiming to weave insurtech advancements into broader market frameworks.

Innovative Products

The market is being transformed by insurtech firms introducing groundbreaking offerings in insurance. Notable examples include:

  • The provision of digital-first platforms for the comparison and procurement of insurance by GoHealth and Policygenius.
  • Metromile’s car insurance that charges based on the miles driven.
  • Digital health plans presented by Oscar Health.

Consumers who are in search of accessible, customized insurance products find these options appealing, as they come from an array of insurance carriers backed up with expertise from seasoned insurance executives.

These cutting-edge products aim to serve specific customer segments—for instance, Cuvva’s model offers hourly car-insurance rates while Kroodle engages customers through social media tactics. Enhanced consumer engagement facilitated by such innovative solutions leads to a boost in sales figures for companies integrating them into their portfolio.

Summary

Technological advancements are revolutionizing the insurance industry, enabling enhanced customer engagement, tailored services, innovative products, and operational efficiency. Adapting to evolving customer expectations demands continuous adoption of cutting-edge technologies.

Improving sales efficiency through streamlined policy sales processes is a key advantage of integrating technology, boosting customer satisfaction and revenue. However, the talent shortage crisis and lack of technological expertise pose challenges.

Insurers are addressing this by upskilling existing staff, recruiting digitally-savvy younger generations, and collaborating with specialized IT staffing agencies. Embracing technology is crucial for insurance companies to maintain competitiveness and thrive in the digital age.

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