Multiple drivers of change are rapidly and irreversibly shaking up the insurance industry. Carriers are coping with the impact of climate change, and generational customer and workforce shifts are reshaping how insurers operate. To succeed in this new reality, carriers need to consider new approaches to managing the business and turning these changes into opportunity. Insurance data solutions can help.
Incorporating AI in Insurance to Tackle Climate Risk and Profitability Challenges
With increasingly frequent and severe natural disasters, insurance carriers are finding it more difficult to accurately price products to cover their actual climate risk. In areas where hurricane, tornado, and fire risks are rising fastest, some carriers are simply exiting the market.
And this is just the beginning. In one recent Deloitte report1, more than half of the surveyed US state insurance regulators said climate change is likely to have a high or extremely high impact on coverage availability and underwriting assumptions.
Maturing AI and predictive analytics technologies are helping insurance companies better analyze catastrophic models, assess potential weather scenarios, and improve risk management. This analysis requires intensive compute power and huge volumes of high-quality data that is fit for insurers’ business applications.
Insurance data solutions bring together data management, data governance, master data management, and reporting in a single platform. Powerful AI and predictive analytics tools can give data a voice, but effective data management and data governance solutions make sure the data has something to say. Together these solutions help you understand and anticipate climate risk and appropriately price your products.
Engage customers in the way they prefer
A second force reshaping the insurance market is a generational change in customers. Millennials and Gen Z customers want a frictionless, omnichannel, digital experience when they purchase policies and interact with your company. Yet older generations still want the same in-person, analog service they’ve always known.
Carriers need to balance these requirements. How can they provide the comfort of a consistent experience to legacy customers who aren’t digital natives while also finding budget to innovate and deliver engaging digital interactions that attract a younger, less brand-loyal clientele?
Insurance data solutions offer master data management capabilities that help you know each customer, regardless of generation, and interact with people in their preferred ways. With these tools, you can move from policy-based views of clients to customer-based views that help you understand the nuances of each customer and communicate in a way that replicates the human experience.
Use AI as a workforce multiplier
The insurance workforce is poised for a talent crisis. The US Breau of Labor and Statistics predicts that 400,000 workers will leave the insurance industry in the next few years,2 primarily due to the impending retirement of older employees.
Because many younger generations have postponed buying homes and cars that require insurance, they are unfamiliar with the insurance business. Some 80% of millennials say they have limited knowledge or understanding of employment opportunities in the industry. And younger workers show a distinct lack of interest in the insurance industry as a career.
To attract and retain younger generations of workers, you need to double down on digital transformation and embrace AI technologies. By automating routine tasks, AI can help your company do more with a smaller workforce.
Implementing AI-Powered Data Solutions in Insurance
Insurance data solutions can help carriers meet these challenges by supporting a holistic data management strategy. The insights yielded by AI and predictive analytics solutions can help you address climate risk and improve risk management, while allowing workers to focus on value-added tasks.
The right data management platform can help you know your market, gain efficiencies and economies of scale, increase margins, boost profitability, and reduce costs. No longer do you need to manually assemble data from multiple business systems and use it to produce reports. A modern insurance data platform can help you deliver data from anywhere in the data landscape to everywhere it is needed in the insurance value chain.
Choose a platform that supports data management capabilities seamlessly and without friction. The best solutions offer capabilities such as data ingestion, data and application integration, data governance, data quality, master data management, and a data marketplace where you can publish data for user access. The power of AI and generative AI should be infused throughout these capabilities, helping you know where your data is and what kind of data you have.
By delivering trusted, usable business metrics, analytics, and reporting, the right data platform can help your business leaders make the best insurance decisions possible for optimum outcomes.
To learn how data management solutions can help insurers convert change into opportunity, read this brochure.
