The year to step up
Tough times create strong technologies. This paraphrase of a well-known quote that has been circulating on the Internet for a long time perfectly reflects our times. It may also be a good inspiration for our Insurance Company's 2023 activities. Why? I hasten to explain.
A time of turmoil or even economic downturn results in greater caution and prudence in spending, which could mean a slowdown in an organization's growth. However, in today's IT world, full of marketing slogans, buzzwords and technology hype, such a time could prove to be salutary. Instead of chasing the latest trends, it is much better to consider which technologies will benefit our organization the most. And there are a few trends that have made quite a splash in the business world, but are still not very common in our insurance industry.
Predicting the future
If one were to try to explain metaphorically what the insurance industry does, it could be described as "predicting the future." After all, the assessment of insurance risk, and therefore the way premiums are calculated, is such a prediction. What's more - today, in our own way, we count the probability of fraud or the chance of an additional product being sold or our customer leaving.
However, while other industries such as logistics, retail, e-commerce and education implemented "predicting the future" into their arsenal much later than the insurance industry, they are now often more advanced in this area. This change is due to the fact that they are implementing current predictive analytics tools based on machine learning instead of classic methods. I am aware that I am writing about unregulated industries, but delaying the implementation of predictive analytics in an industry where prediction is the center of the company's operations is of concern to me.
Getting information
The second trend that seems to me inevitable in the insurance industry is the Internet of Things (IoT). Typically, its application goes in exactly the opposite direction of predictive analytics. Through the use of such devices, we can, for example, not so much predict whether a vehicle user is going to get into a bump, but assess how he or she is driving and lower or raise his or her premium on that basis.
Of course, the Internet of Things is equally useful in supporting predictive analytics. We need to understand that many algorithms will be much more accurate if they receive variable, timely data in addition to static, infrequently changing data.
Without a cloud, not a move
In both of the previous two scenarios, in addition to some regulatory or business constraints at our Insurance Companies, we will face another obstacle. Both of these scenarios require a lot of computing power, but usually in short time windows. As a result, projects under the sign of machine learning or the Internet of Things are often blocked by the cost of the hardware we would have to purchase to implement them.
And this is where cloud solutions come to our aid. I'm far from saying that the cloud is the solution to all the ills of IT infrastructure, but for environments that need to scale up to a large size for a short period of time, while they are hardly used for the rest of the day, the use of the cloud is fully justified.
Quality, not "somehow"
Another trend that I see as crucial to the development of insurance organizations is data quality. No analytical, predictive or even reporting tools will do their job if we don't make sure that the data is well prepared, that is, integrated and transformed into appropriate analytical models, and that the quality of the data is controlled and improved.
Particular attention should be paid here to customer data, so firstly to identify the customer at the level of the entire organization, i.e. all existing IT systems. Secondly, to build 360 profiles of our customers. I estimate that the preparation of the latter in the long term will be crucial in gaining a competitive advantage in the industry.
Accelerate, but with your head
In my opinion, 2023 will be a good time to accelerate the digital transformation of insurance companies. I don't mean that there should be more projects, but quite the opposite. This is the best time to focus on key issues that we overlook because they require more of our attention, work on the organizational or even legal side. Therefore, at a time when there will be fewer projects, it is worth focusing on the ones that will really make a difference.
