Insurance is a global market sector that involves underwriters, managers, support specialists, analysts, and, of course, developers. While customers interact with regular employees, the industry can’t survive without people who make software. Proper insurance product development leads to greater client satisfaction, that drives revenue, respectively. And it becomes even more critical in times of ubiquitous digital disruption.
In this article, we are to talk about insurance trends with the focus on insurance software trends for 2020. Without further ado, let’s start!
General Insurance Industry
Insurance remains highly competitive and beneficial. Although Deloitte reveals that there were only 14 new startups in 2018 (and 3 in 2019 to date), the market fights for customers severely. Hundreds of new players who entered it from 2012 to 2017 are receiving millions of dollars in funding. Actually, this year has set a record in investments – $3.2 million.
To understand where software development is going, we should take a look at insurance trends in general. There are five significant aspects of insurance growth:
- Economic: risks, benefits, competition, partnerships, growth opportunities.
- Environmental: sustainability, pollution, climate changes.
- Political: regulations, taxes, terrorism, global relations.
- Social: customers, talents, stakeholders, corporate responsibility.
- Technology: data, analysis, software, apps, wearables, and other devices.
This guide is mainly dedicated to the last factor as we study the evolution of the insurance software market – InsurTech. Nevertheless, other points deserve our attention.
For instance, social trends for 2020 are focused on customers, generally. Experts detect shifts in customer relations as companies start treating them as people, not just data or money. New products (preventative, protective) for new customers will rise, for sure.
The economic section provides for multi-model approaches. Today, insurers can’t just stick to one business model as they have to evolve constantly. As well, this driver enables various collaboration options, but we will talk about them later.
Finally, political changes lead to better privacy compliance reached through advanced data management. Particularly, it’s typical for the L&H sector. Recent amendments in the USA also require insurers to deliver new tax plans focused on new opportunities.
Now, let’s proceed to the software itself. Put simply, insurance-related applications are digital solutions that help insurers to organize their work better. These tools can help in tracking, recording, and storing data; analyzing trends and patterns; delivering more personalized offers; addressing customer issues quicker; etc. Software for insurance can be divided into three broad categories based on the functions:
- Spreadsheets. Simple tables that support data gathering, visualization, and fundamental analysis. Spreadsheets are suitable for general tasks in small to medium companies.
- Commercial tools. Apart from tables, these apps include reporting, auditing, and policy management modules. They are the best choice for SMEs.
- ERP applications. These comprehensive products add the power of automation and advanced analytics. Often, they are tailored to the needs of big businesses.
MarketWatch, with reference to 360 Market Updates, reports that the global insurance software market will reach $15 billion by 2023. This growth represents a CAGR of 4.48%. As a result, we can expect more software solutions with even better efficiency. Automated apps that process applications in a split second, self-service cabinets for users, decentralized insurance tools – there are many possibilities. Let’s look at them.
5 Major Software Trends for 2020
While insurance will see some significant changes in 2020, software for this industry should correspond to the new needs. That’s why developers should keep an eye on emerging trends. Apart from general modernization with the sunset of legacy systems, we expect to build new digital infrastructure and reduce the talent gap. For more details, check out five of the most prominent patterns for the next year’s insurance software.
1. Artificial and Augmented Intelligence
Although we’re far away from true AI, various narrow tools for different tasks are already working. Insurance processes can benefit from them, too. KYC/AML checks, policy underwriting, pricing, reporting, notifications, fraud detections – everything can be delegated to automated solutions. AI is highly useful in data gathering and processing, as well.
Today, a new trend emerges. Augmented intelligence centers around the idea of cooperation. It takes the best from both worlds, i.e. human creativity and machine efficiency. By working together, human operators and AI systems can reach new heights. This approach enables better decision making and quicker machine learning.
2. Blockchain-Based Developments
The next buzzword is our beloved blockchain. Put very simply, it’s a distributed ledger that exists on several machines simultaneously instead of one server. Thus, it provides for next-gen data storing and protection standards: information is transparent, verifiable, and tamper-proof. Blockchain is especially helpful for reinsurers who can authorize users and deliver policies much quicker, cutting costs.
3. Digitization on All Levels
Talking about global universal trends, we can’t miss digitization. This word combines the whole new approach to doing business. Digital enterprises move away from personal or phone interactions switching to online channels. Some brokers become online-only while others implement the phygital strategy by combining different interaction options.
For software developers, digitization opens new ways to sell their products. Say, they can involve in the next projects:
- Design of API interactions to connect different business parts.
- Development of infrastructure for businesses to make them ready to evolve.
- Expert consultations on digital transformation and/or cloud migration.
- Launch of new software available remotely or inside the client company.
- Updates of existing apps to make them ready for new infrastructure.
4. Full Data-Driven Personalization
Probably, it’s the most significant trend. We live in a world full of data, and we see that customers become kings of the hill. Insurance companies utilize Big Data, business intelligence, and analytics to understand their clients and deliver more relevant benefits. Thanks to abundant information, insurers become more individual-oriented and personalized.
Needless to say that insurance software will flourish on this soil. From traditional databases to AI-driven analytical platforms to apps for drones that capture data in disaster areas and sell it to underwriters, software developers shape the modern look of insurance. IoT and wearables will play a major role as these technologies allow to collect data from each client.
5. InsurTech Partnerships for Talents
Last but not least, software vendors should care about employees. The fact is that the insurance industry feels a big talent gap. The Bureau of Labor Statistics reports that there will be 200,000 vacancies in the industry by 2022. Simultaneously, young professionals show little desire to work in insurance, so the gap is rising.
In this case, InsurTech firms can change the game. By setting partnerships with traditional agents and brokers, startups can attract new developers, managers, and other specialists in this sector. It’s clear as youngsters want to work in modern communities while the majority of underwriters is old-fashioned and static.
The Future of Insurance
In 2020 and further, we will see more changes in both general insurance and software made for this industry. Due to a large number of maturing InsurTech startups, traditional firms have to evolve or extinct. That’s why tech trends will reshape the market greatly. Whether it’s not totally clear which technologies will rule the world soon, we can be sure of the importance of data. By investing in data-driven solutions, you can prepare for the future. Good luck!