Over the years, technological advancements have forced several industries to improve their existing way of getting things done. Insurance is one of those industries that has experienced improvements in terms of using the latest technologies and software. Data suggests that the global artificial intelligence market size is expected to reach $641.3 billion by 2028.
In the near future, it is definitely going to affect several major functions associated with the insurance industry. Here, we will be discussing the impact of changes introduced in the insurance sector and how they can transform the future of work.
Insurance and the Future of Work
To reflect the changing landscape of the market, the way of conducting business should also be changed. Generally, in insurance, the workforce keeps getting older. Statistics from different research conducted over the years show that the participation of older age group employees has increased.
The pandemic caused companies to replace and drove some of their older employees to get early retirement. Hence, the need for hiring new and valuable employees has increased.
Here are some of the major aspects that explain potential changes in the future of work:
Impact of AI on the Insurance Industry
As McKinsey’s reports suggest, the insurance industry is shifting and becoming tech-driven. Artificial intelligence (AI) when used effectively can help insurance companies deliver their message in the most efficient way through machine learning and deep learning. Moreover, it also becomes important to hire new employees or provide training to the existing ones.
They must understand how AI is going to help them in distributing, reshaping claims, underwriting and pricing. Employees should learn the skills and understanding of AI to get the most out of it. This emerging technology can be a great tool for creating an excellent work culture and vision to become a successful insurance company in the future.
With the proper functioning of AI, customers will be able to experience a much faster way of purchasing an insurance policy. The involvement of the customer and the insurer during this method would be very less as compared to the conventional method of buying a policy.
Hiring the Best Talent
Improving the process of hiring talents helps companies thrive and achieve success in the long term. Talent development and high potential staff retention are the two pillars using which insurance companies can easily adapt to the new way of working. Focusing on competitive advantage is a requirement if you want to get ahead of your competitors.
The key factor in achieving a competitive advantage is to focus on human capital management and providing effective training to the staff. People are considered the most important resources and if they are used in the correct way they can do wonders.
Due to the increase in the use of AI and other technical methods, the number of employees can be expected to decrease. Many insurance companies may rely on a lesser number of extremely talented and high-potential employees. As hiring such talents can be tough, companies should focus on improving the overall employee experience.
Remote Work
The consequences of the pandemic have given insurers an opportunity to stay at their home and perform their duties and responsibilities. Even after the pandemic has ended, most of the employees working for an insurance company choose to work from their homes over working in an office environment.
Providing flexible working options nowadays is a great thing used by insurance companies to attract top-notch talent. There are plenty of companies that have adopted a hybrid method of working. A hybrid method of working is a combination of working in an office setting and remote working options.
As an insurer, you can perform most of your day-to-day duties remotely too. Interacting with potential customers or leads can be done in person or over video or audio calls as well. As technology grows it is important to grow your digital capabilities. According to recent research, by the year 2030, the need for learning and adapting the latest technological skills would increase by 55%.
Productivity
Increasing productivity has always been an important element for any organization. Improvement and development of skills of the employees should be another major priority of the managers. There are tons of proven ways that may help in achieving these goals without wasting resources and manpower.
The employees can rely on artificial intelligence, 5G, and augmented and virtual reality to perform their respective duties and responsibilities. In the future, there will be new job roles due to the introduction of new technologies. It has also been suggested that by 2030, artificial intelligence could help insurers save $390 billion in costs across their front, middle and back offices.
By embracing new ways of working, leaders or managers in insurance companies can ensure that their employees are getting enough resources to complete the assigned work. Improving the knowledge and skills required to work with new technologies creates a flexible work environment which in return helps improve the employee experience.
Payroll
Before the pandemic, physically coming to work in an office was a common business strategy shared by most organizations. It is important for the long-term success of a company to make sure that the strategy and philosophy of the payroll must support its business strategy.
When technology would take over most job roles there would probably be fewer employees required to work for insurance companies. Every insurance company should answer this question, ‘How do I pay people?’. This transition in adapting to the new rules of the work culture is surely going to affect how these insurance companies carry out their payroll strategy.
Pros and Cons
Implementation of new technology in the insurance industry will bring some benefits and risks as well. Insurance companies are going to increase the use of artificial intelligence to gather more information about their customers. Social media plays the most important role in gathering information without putting more effort into the process.
Here are some of the major benefits and risks mentioned together:
Helps in Getting Detailed Demographics
The insurance industry is a highly competitive sector and the use of artificial intelligence can be helpful in getting all the fine details that are helpful in getting ahead of the competitors. AI allows insurers to distinguish customers based on their age, income, location, financial status, or ethnicity.
The electronic devices we use in our everyday life are connected with each other through billions of sensors which is known as the internet of things. It helps in creating a perfectly tailored risk profile focused on every individual customer. The process of creating an individual profile is known as behavioral policy pricing.
Smart Things
In the future, all the things we are connected with are going to be smart and technology-based. We will live in an ecosystem of sensors such as smart houses, smart cars, phones, watches, fitness trackers, and more. The home sensor will be connected to the insurer’s network which can be used to track potential threats.
When your insurance company is connected to your smart car, it will monitor the way you drive and maintain your car to provide you with the best car insurance premium. In a similar way, your insurance company can gather your medical data by connecting with your fitness trackers and accessing your medical records.
Loss of Privacy
Insurance companies use the gathered data to provide the best possible services to their customers. The customer data can be used for various other purposes as well and there might be a threat of selling data to a third party.
The harsh truth is that the data doesn’t belong to the person, it actually belongs to the party that paid for it. It is the customer’s responsibility to legally protect their data from being used for illegal purposes.
