The insurance industry is shifting away from traditional means of insurance towards more evolved methods that rely on advanced technology and new business models to meet the pace of a fast-changing, always-on-and-connected world, says information technology (IT) multinational Wipro South Africa insurance head Jaqueline van Eeden.

The model used by the insurance industry has been the same for decades and, despite an increase in product complexity, the industry relies on policy premium income and asset management to function.

“However, the rise of disruptive technologies is changing the traditional model. Insurance companies are being forced to change from a product-centric model to customer-centric approach,” she says.

Van Eeden elaborates that insurers are moving towards customised, usage-based, real-time coverage models, and moving away from a risk-based underwriting approach to a risk-management approach.

Further, advancements in big data and analytics are helping insurers to select the correct risk profile with greater accuracy than before.

A top priority is replacing legacy customer interaction and distribution channels that use call centres and one-on-one visits with anywhere, anytime platforms.

“IT is providing easier and instantaneous ways for clients and insurers to obtain and update information, even enabling seamless and accurate billing on the same platforms.”

Key trends worldwide are the increasing use of the Internet of Things (IoT) by insurance companies, the use of big data to improve claims processing, increasing demand for cyberinsurance, the emergence of peer-to-peer insurance, and a growing focus on mobile applications for interaction between insurers and their customers.

“IoT is fast becoming a transformational driver in the insurance industry. Several automotive insurers have implemented new models based on vehicle telematics. The possible applications of connected devices across the industry are extensive and have the potential to revolutionise claims processing, product pricing and fraud detection.”

Meanwhile, many insurers are deploying systems to improve operational flexibility, function standardisation, cost savings, scalability and business agility. Small to medium-sized insurers are early adopters of cloud systems, whether hybrid or public, which are allowing for faster claims, policy and billing services.

“Insurers are facing an all-time low retention rate, as well as growing customer demand and rising concerns about cybercrime,” she says, adding that insurers cannot assess their business positioning and the associated business risks fully, including security breaches, if data is not captured and extracted accurately.

Insurers are being forced to make operational changes that will enable them to use data better to retain business and mitigate risks. They are also automating and digitising their legacy core systems and realise the benefits of improved efficiency and customer interaction at multiple touch points, Van Eeden explains.