Increasingly, the need to offer products and services based on up-to-date, or, in some cases, even realtime data is imperative in industries like manufacturing, retail, healthcare, and insurance. Analytics and AI (artificial intelligence) technologies offer a much more accurate and granular look at various metrics that help businesses make decisions about their products, services, and customers. In the insurance space, there’s a drive to adopt predictive analytics and data analytics that can enable more accurate customer experiences and reduce fraud. This is due not only to the big-picture trend toward digital transformation but also to the specific need to compete with insurtech startup firms. In many cases, these startups were founded on the premise of using these technologies to differentiate themselves from the “big dogs” in the space.

In fact, for the past several years, insurtech startups that leverage IoT (Internet of Things), AI, and data analytics have been entering the scene, offering a level of personalization that traditional insurance companies can’t typically touch. ResearchAndMarkets’ data suggests the insurtech market will grow by $21.72 billion between 2020 and 2024, and Grand View Research data suggests the global market will swell to nearly $61 billion by 2028. During the post-COVID recovery phase, insurtech solutions, like AI-driven analytics services, will help insurers process claims more quickly and with fewer errors.

With the changes that occurred in the past year thanks to the COVID-19 pandemic, including the increase in remote work solutions and the overall increase in people’s and business’s adoption of digital technologies, the insurance industry must consider how accelerating their own digital transformations can help them meet the demands of their customers in a post-COVID world.

A PwC survey conducted in June 2020 found that 41% of consumers are likely or more likely to switch insurance providers due to a lack of digital capabilities, and 15% say a lack of digital capabilities is the No.1 challenge while interacting with their insurers. Financial stress, too, will be a factor in how consumers choose insurance providers and services going forward, and insurance companies need to be able to offer plans that meet their customers’ needs without being out of reach financially. If they can’t find a way to meet customers’ needs in these ways, people will switch to smaller insurtech companies that can.

Paul Ford, CEO of insurance underwriting and distribution platform Traffk, says if insurance companies don’t incorporate AI-assisted, data-driven insurance technology into their underwriting process, they’ll face extinction. It’s quite possible that this warning isn’t overblown. Digital transformation is no longer a luxury for companies with dollars to spare; it’s a necessity for providing the types of personalized, data-backed products and services people want and need in 2021 and beyond.

As the COVID-19 chapter begins to come to a close throughout 2021, insurtech will get a boost from the pandemic’s effects on how people perceive the value of digital tools in health and wellness-related products and services, including insurance. Similar to how retailers and manufacturers have had to adjust to provide the digital tools people require in a COVID and post-COVID world, insurance providers must consider how accelerating their digital-transformation timetables will help them stay relevant in a changing, connected world.

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