Top 5 Challenges Facing The Insurance Industry
While India’s insurance sector has been growing dynamically in recent years, its share in the global insurance market remains abysmally low. This article traces the journey of the Indian insurance sector, and underlines issues such as low penetration and density rates, inadequate investment in insurance products, and the dominant position and deteriorating financial health of public-sector players.
Here is a look at some of the biggest challenges facing by the insurance industry:
- Digitizing Small Commercial
A niche but profitable market within the insurance industry is small business insurance, otherwise known as small commercial. While this section of the market had been relatively insulated from outside pressure to modernize and get on board with digital technologies, that is no longer the case. Larger, more aggressive insurers understand the value of small commercial and are making a push to move into this market and update it. This is forcing carriers who already offer small commercials to significantly invest in new digital technologies to keep up with their competitors.
Commoditization, the process of treating someone like they are a mere commodity, is a fast way to lose customers. They want to feel valued and important, not like just another number. To achieve this, insurers have been deploying solutions such as artificial intelligence (AI) and automated processes to deliver personalized yet fast, customer experiences. Digital insurance technologies also help insurers create unique products quickly with low-code tools, as well as use complex data sets to improve risk pricing and offer better, more personalized rates.
3. Improving Quality of Analytical Data
Data is constantly being generated and leveraged in the insurance industry. But as we know, quantity doesn’t always equate to quality. To get the most out of user, operational and marketing data, insurers need to have robust data management plans in place. With these plans, they can improve the overall quality of analytical data and gain more meaningful insights to improve customer experiences.
4. Using Data To Improve Experiences
While using data to improve offerings and, ultimately, customer experience is not a new phenomenon in the insurance industry, doing it well and consistently is still a challenge for many. There are outside factors at play here as well, as insurers grapple with market instability and increasing competition.
Since the world has gone completely digital, there is now an ever-present concern about the cybersecurity threats. This presents a unique opportunity for insurers, as individuals and businesses alike seek out protection for their own data and privacy. For individuals and businesses wary of identity theft or a data breach, insurers can cover the costs associated with cybersecurity issues which mostly includes contacting authorities, notifying individuals, settlement costs, fines, costs of discovering the cause, loss of business, loss of customers, loss of reputation and cyber extortion. Providing this coverage can be a cost-effective, low-risk investment that shows insurers are forward-thinking and looking out for the best interests of their customers.