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Digital age insurance and transforming the value chain with tech

DIGITAL VENTURES November 23, 2018 2:21 PM


Digitizing Insurance is still one of Digital Ventures’ hot topic. Today, we will talk about drivers that benefit and add value to the insurance value chain. Some of them are currently facing obstacles, unable to optimize services, provide delayed protection, and experience high operating costs. How will the arrival of technology solve these problems? Let’s find out from the summary of the Digitizing Insurance report by Digital Ventures.


Credit: datanami

Main players in the digital insurance transformation

Prior to learning about the technologies in the value chain, allow us to share an overview of the business that will help transform the process into the digital phase. This is a macro perspective of what’s happening in the digital insurance business from The InsurTech Book launched in 2018 by Fintech Circle Ltd.

In 2016, there were 30,000 InsurTech and FinTech startups worldwide. More than half of the startups began in the USA with 30% and 20% from Europe and Asia respectively. Since 2004, InsurTech startups received up to over 20 billion USD worth of funding.

Who is part of the insurance value chain?

  • Clients are users of the insurance service who select the terms and conditions that best fit their needs. They can purchase the product via brokers or directly from the company.
  • Broker & Agent who sell insurances. Brokers will purchase insurance on behalf of the clients and isn’t attached to any company while Agents as representatives of a certain company. Clients who purchase from an agent are directly purchasing from the insurance company.
  • Insurers are the company who offer products to the client. They are responsible for designing terms and conditions, processing claims, and protection according to the insurance process.
  • Reinsurer provides insurance to insurance companies to diversify risks as insurance companies themselves also have limitations when bearing risks.

Problems in the insurance value chain

Despite its system design, today’s insurance process still leads to problems that cause various opportunity losses and waste of resources. This can be categorized by processes in the value chain as follow:

  • Product Development. This step is product design on the basis of consumer needs. The obstacle in this step is the terms and conditions that don’t match the insurer’s needs and don’t coincide with the company’s risks.
  • Marketing, Sales, and Distribution. This is the step for sales and branding as well as sales channel management, both directly and via brokers or agents. The problems here is that each step requires numerous human labors with a lot of middlemen and processes before reaching the clients. As a result, it is difficult to focus on the services and communication for the product is incorrect or incomplete. Moreover, document work is below the standard which causes delays in responding and offering products to clients.
  • Underwriting is the step where the premium is evaluated and set according to the insurable risks. Here, customer satisfaction is the speed and value for money. Problems at this stage are when data collection is incomplete, incorrect, or excessive. As a result, the evaluation process is slow and imprecise. Delays and inconvenience may mean that converting applicants to clients may be unsuccessful.
  • Claim Management is the claiming process according to the previously agreed terms. The problem at this stage is incorrect claims causing damages of billions of dollars according to Moreover, at this stage, the process can be slow and waste tremendous paper resources.
  • Finance and Investment Management is the source the income for insurance companies. Insurance clients especially life insurance are long-term clients. The time and coverage are unstable expenditures which don’t match with the time or income acquired by the insurance companies. As a result, insurance firms must efficiently manage their portfolio so that cash flow is sufficient for unstable expenditures because the remaining sum is the company’s profit. At present, Fintech has launched solutions for investments to help conveniently and efficiently solve and manage portfolios.


Credit: propertycasualty360

Technologies to help digitize value chain in the insurance business

The transformation into the digital age for insurance businesses may not be successful without the application of new technologies. At present, technologies in the insurance value chain are as follow:

  • Internet of Things. A technology that bridges human and digital is a key factor in the digital age insurance. It unlocks product development and delivers a variety of options that are in accord with new lifestyles. Also, it helps to precisely collect data for underwriting. Thus, coverage and premium match client’s needs with lower operating costs.
  • Robotics, Big Data, AI and Machine Learning. After acquiring data from the Internet of Things, the efficient use of enormous data at great speed will require AI. AI will help with underwriting, claim management and FN & investment management. Not only AI, but robotic process automation can support automation in various processes. An example is the use of robo-advisor for marketing, sales, and distribution which can provide advice and automatically submit documents.

As seen above, technology is the key to enhancing the insurance business. Aside from improving the value chain, there are many more Digitizing Insurance benefits. Learn more at