- Technology is disrupting the insurance industry and insurers are requested to adopt the changes.
- Clients’ personal data is a prime target for hackers.
- Fraud detection and management remain a significant challenge for the industry.
The insurance industry is going through many complex transformations. Whilst it is becoming more and more a liability to grant stability and assurance, the industry is striving to overcome the challenges raised by technology, data, and frauds.
According to PwC 2017 CEO survey, insurance CEO’s note that the area they would most like to strengthen and to capitalize on growth opportunities, is digital and technological capabilities, followed by customer experience.
Technology is disrupting every sector and insurance is no exception. It is a pacesetter for the industry, but adopting and coping with the latest trends is certainly a trial.
Even though many insurers have started to look for new approaches to improve their business and processes through technology, many are still unaware that innovation can keep their products current and enhance customer experience, especially when it comes to filing claims.
With traditional insurance migrating towards digital channels, we can see a significant number of cyberattacks targeting insurers and putting confidential data at risk.
Whilst, it is the insurer’s responsibility to keep their clients’ data confidential and secure, the industry is increasingly becoming a prime target for hackers. Thus, the amount of data an insurance company possesses is a challenge by itself. This impels insurers to implement an effective cybersecurity strategy in place to prevent and resist attacks.
While insurance companies give businesses and individuals the opportunity to take a risk, managing the risk can sometimes put the company in jeopardy.
Insurance as a business is not exempt from fraud. In many cases, fraudsters try to mislead their insurer be it in motor, life, medical or other lines of business claims. They forge the truth and file claims for intended accidents and planned or exaggerated injuries. The payment of a fake claim can negatively impact the loss ratio.
Therefore, investigations are imperative in major and suspicious claims to verify if the claimant is honest and certify the absence of discrepancies in the claim.
The Insurance Fraud & Digital Transformation Survey conducted by FRISS in 2016 affirmed that 60% of insurance companies actively work on fraud management within the portfolio.
Most of the insurance companies have a dedicated claims control unit that handles fraudulent claims. However, sharing data between private and public sectors could benefit fraud prevention and management.
No matter what the challenges are, insurance will continue to play a pivotal role in the society, protecting individuals and businesses’ assets, maintaining people’s health and provisioning their pensions. Therefore, greater transparency can promote greater stability of the insurance industry.
And, insurance companies need to take advantage of the technological disruption and look at it as an enabler. Hence, they need to use technology not only to enhance their business and interact with customers but also to detect frauds and minimize risks.