Current trends in insurance market digitalization

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Current trends in insurance market digitalization

Olena Zhuravka, Alina Medvid, Anton Zhuravka

Сучасні тенденції цифровізації страхового ринку

Олена Журавка, Аліна Медвідь, Антон Журавка

На сьогодні страховий ринок знаходиться на етапі трансформації внаслідок широкого впровадження цифрових технологій у страхову діяльність. Цифровізація є одним із глобальних трендів розвитку сучасного страхового ринку, яка передбачає використання новітніх технологій не лише для розробки інноваційних страхових продуктів, але й для забезпечення мінімізації страхових ризиків, задоволення потреб клієнтів та підвищення ефективності страхової діяльності. Метою даного дослідження є виявлення впливу процесів глобальної цифрової трансформації на страховий сектор та аналіз рівня використання цифрових технологій у страховій діяльності.

Результати аналізу засвідчили про збільшення обсягу приділеної уваги вітчизняними та закордонними науковцями питанням впровадження цифрових технологій у страхову галузь. У статті досліджено актуальні питання цифровізації страхового ринку, окреслено сучасні напрями страхової діяльності з використанням інновацій у бізнес-процесах страховиків. Було проведено оцінку проникнення цифровізації у вітчизняний страховий ринок, проаналізовано наявність цифрових елементів у ТОП-10 страхових компаній України, що дало змогу зробити висновок про початок впровадження інновацій з метою полегшення взаємодії страховиків з клієнтами та оптимізації своїх процесів. Наступним кроком було оцінено тенденції розвитку такої складової фінансових технологій як InsurTech.

Проведений SWOT-аналіз дав змогу визначити сильні та слабкі сторони впровадження InsurTech у страхуванні, а також виокремити можливості та загрози, які супроводжують цей процес. У роботі було проаналізовано стан та динаміку інвестицій у сферу страхових технологій протягом 20192023 років, на основі якого можна стверджувати, що обсяг вкладених інвестицій в світі в сферу InsurTech має позитивну тенденцію до зростання з кожним роком. Також було розглянуто частку інвестицій у розрізі окремих країн, серед яких найбільше фінансування здійснювали США. Розглянуто інноваційні розробки InsurTech та їх переваги в страховій діяльності. У підсумку були запропоновані основні цифрові тренди для страхового ринку України.

Ключові слова: цифровізація, цифрові технології, FinTech, InsurTech, інновації, страховий ринок, страхові послуги.

The insurance market is currently transforming due to the widespread introduction of digital technologies. Digitalization is a global trend in the modern insurance market, involving the use of the latest technologies to develop innovative insurance products, minimize insurance risks, meet customer needs, and increase the efficiency of insurance activities. This study aims to examine the impact of global digital transformation on the insurance sector and analyze the extent to which digital technologies are utilized in insurance activities. The analysis reveals that both domestic and foreign scholars are increasingly focusing on the integration of digital technologies into the insurance industry. The article explores the current trends in the digitalization of the insurance market and outlines how insurers are utilizing innovative business processes to improve their operations.

The penetration of digitalization into the domestic insurance market was assessed, and the presence of digital elements in the top 10 insurance companies of Ukraine was analyzed. The conclusion was drawn that the introduction of innovations has begun to facilitate the interaction of insurers with customers and optimize their processes. The next step was to assess the trends in the development of InsurTech, a component of financial technology. The paper presents a SWOT analysis of InsurTech implementation in the insurance industry, identifying its strengths, weaknesses, opportunities, and threats. It also analyzes the state and dynamics of investments in insurance technology from 2019 to 2023, showing a positive upward trend in global investments every year. The article analyzes the distribution of investments among individual countries, with the United States providing the largest funding. It also examines the innovative developments of InsurTech and their advantages in insurance activities. The main digital trends for the insurance market of Ukraine are suggested in the conclusions of the work.

Keywords: digitalization, digital technologies, FinTech, InsurTech, innovations, insurance market, insurance services.

Introduction

In recent years, there has been a rapid development of digital technologies and their implementation in all spheres of life. The insurance industry is also accepting these transformations, gradually using innovations to improve insurance products, minimize risks, reduce service costs, and ensure high-quality customer satisfaction. Insurers are utilizing innovative technologies, such as chatbots, electronic platforms, artificial intelligence, and data analytics, to streamline processes.

These technological advancements are driving significant changes in the insurance market, leading to a new way of providing insurance services based on digitalization. Therefore, it is increasingly important for insurance companies to incorporate modern state-of-the-art technologies into their activities. This will enhance their competitiveness and strengthen their positions in the international market.

Analysis of recent research and publications

The introduction of digital technologies in insurance activities has led to transformation processes that have caught the attention of both domestic and foreign authors. The insurance industry's digital transformation has also been the subject of increasing interest worldwide. The study's results demonstrate a clear growth in scientific activity in this area from 2013-2023 (Fig. 1).

To aggregate the scientific literature on this issue, we considered several works by domestic and foreign scholars. Particularly, the study conducted by L. Popova [1] paid attention to the nature of digital technologies and their role in the activities of insurance companies. The author argued that insurers should view technology development as a form of business transformation to meet customer requirements and increase competitiveness.

Fig. 1. The dynamics of scientific publications on the study of the utilization of digital technologies in insurance worldwide

Source: compiled by the authors based on data from Google Scholar

In their analysis, Bazylevych, Prykazniuk, and Lobova [1] examined the risks associated with digitalization and explored the potential benefits of implementing innovations that enhance customer engagement and improve insurers' risk management. The research conducted by N. Mandra and O. Loktionova [3] identified the need to use innovative and intelligent tools in the business processes of insurers, including automation, chatbots, cloud computing, and technologies with elements of artificial intelligence. Other scholars, such as L. Chvertko, T. Kornienko, O. Vinnytska [4], Y. Zavoloka, A. Efremenko, and Y. Malashenko [5], have also contributed significantly to this topic. Among foreign authors, G. Perrott's research [6] is noteworthy for examining the role of InsurTech in the insurance sector and analyzing the potential risks associated with the introduction of innovative technologies in insurance activities.

Although there is a growing interest in the digitalization of the insurance industry, further research is needed due to the global trend of digital transformation. This trend is forcing a review of traditional approaches and methods to insurance through the use of innovations in business processes. Furthermore, the field of InsurTech, specifically the collaboration between insurance companies and InsurTech startups, necessitates thorough examination.

Results of the research

The insurance industry's development and improvement require digitalization, which entails transforming the entire business, from online sales to issuing electronic policies, digital signatures, and remote identification. Digital technologies enable insurers to optimize costs and increase the speed of customer service.

Figure 2 illustrates the key digital technologies used in insurance.

Fig. 2. Digital technologies used in insurance

Source: compiled by the authors based on [1]

Digital communication channels and mobile applications offer convenient ways for customers and insurers to interact. These include online insurance policy issuance, loss status notifications, and other services. The use of artificial intelligence and data analytics enables insurance companies to automate processes, reducing costs and providing more accurate customer information. This, in turn, helps conduct detailed risk assessments and predict payments. Big Data analysis aims to develop personalized insurance products, cyber risk insurance, claims processing, and fraud detection [2, p. 16]. Mobile applications are used to help customers monitor their policies, receive notifications about the status of their insurance coverage, and make quick payments for services. Technologies such as virtual assistants and chatbots are employed to ensure high-quality customer service. Insurance companies can securely process data and perform operations on policies using blockchain technology. The use of digital innovations is essential for insurers' business processes [3, p. 203].

The initial use of digital technologies in insurance was the development of official websites for insurance companies. These websites provide potential customers with information about the company and the insurance services offered. Today, all insurance companies have official websites, and some offer insurance calculators for quick online contract calculations.

Registration of online accounts on insurance companies' websites is becoming increasingly popular. This allows customers to easily review their existing insurance contracts, track paid premiums, make online payments, and report insurance claims.

Some domestic insurance companies have developed their own mobile applications that enable customers to quickly and conveniently draw up contracts, make payments, view the terms of an insurance policy, and more. Several insurance companies have mobile applications, including PJSC «Insurance Company «UNIQA», PJSC «IC Universalna», PJSC «European Insurance Alliance», PJSC «UPSK», IC «Providna», PJSC «IC «Persha», and others.

Based on the obtained data, it can be concluded that insurance companies have started to implement digitalization tools in their operations to enhance customer interaction and streamline business processes. However, it is important to note that not all insurance companies currently utilize all of the available tools. Out of the 10 insurers surveyed, only one, VUSO Insurance Company, has implemented all of the offered elements. 80% of the analyzed companies use an online calculator and an online store, while 70% use an online account and mobile applications. Only 40% of the listed companies have a chatbot, and the remaining 60% offer their customers communication through hotlines or chats with company consultants.

Table 1 presents the results of the analysis of digital technology usage in the top 10 insurance companies in Ukraine.

Table 1. Analysis, of digital elements in the top 10 Ukrainian insurance companies