By Patrick O’Neill, Founder and President, Redhand Advisors
The data tsunami is here, and organizations can no longer tread water to stay afloat.
Historically, the insurance industry has been behind when it comes to collection, distribution, analysis, and reporting of data, and hampered by manual methods, poor communication, and legacy technology. Today, organizations have access to more data than ever before and are leveraging it to better manage risk.
Siloed data such as supply chain, business operations, and other vital information all have typically not been readily accessible and risk management had little visibility. Yet all that data can help an organization manage their risk more effectively. To thrive in 2023, organizations must improve their handling and use of data.
The following are five key trends to look out for in the next year.
- Risk-tech landscape continues to evolve rapidly.
Industry investment in innovation continues to grow rapidly, specifically in niche areas such as RiskTech. A large number of solutions are available today to address broad areas of the risk and mitigation process. Cloud computing has spurred faster build, distribution, and implementation of these solutions. Earlier solutions were exclusively for large-scale risk management programs focused narrowly on insurable risks. However, RiskTech now offer much broader solutions to manage the complexity of risk that organizations face. Nevertheless, many of these solutions can be integrated into a RMIS if they aren’t already built into it.
These software trends are reshaping the way organizations are managing risk. Demand for some of these solutions may grow large enough to be absorbed into broader RMIS solutions, but there will always be bespoke solutions to address specific needs.
2. Application Program Interfaces (APIs) increase access to risk data.
An API allows systems to communicate with each other without complex software development and customization. APIs are the key to systems integration, connecting your key systems such as a RMIS with other applications. These interfaces are growing and changing how the insurance industry shares data.
APIs also open a direct connection to real-time data, which has been a significant challenge for the insurance industry. Historically, risk data such as claims has been updated on a batch basis, anywhere from nightly to once a month, but it’s nowhere near real time.
Carriers and other industry partners are starting to offer APIs, which will revolutionize how you can access risk information. You can link to your internal systems via APIs as well to get a view into key business metrics to make better decisions. APIs offer your organization faster, more seamless access to information and can become a game-changer for your process.
3. Analytics, artificial intelligence (AI) and machine learning grow.
Today, most organizations have basic data analytics in play, but the vast amounts of data available in insurance makes the industry a highly worthy opportunity for AI, machine learning and advanced analytics. Powerful new analytics tools are available and more realistic for industry today, given the amount of data generated. Knowing how to leverage data using these tools within or adjacent to the RMIS can help businesses stay ahead of the game and control costs. Expect to see greater emphasis on risk data to predict and find insights to drive business in 2023.
Organizations can take advantage of this trend through tools in your RMIS or third-party analytics tools. Advanced tools layered on top of your RMIS use APIs to pull data for the analysis, then push insights back to the user or the RMIS. The result: less time spent looking at data and more time addressing opportunities based on what the analytics tells you.
4. Digital transformation takes hold.
Insurance has come later to the digital transformation party, but we will likely see a surge in demand for it in 2023. The industry wants to move away from paper and manual processes as much as possible, and some organizations have already begun the total transformation of all business processes.
Digital transformation leads to improved efficiencies and quicker decisions, but it also gives you better, faster access to the data you need to run your business. Real-time information is used to ensure efficiency of the team. Data-driven decision-making optimizes processes and can even allow organizations to predict and anticipate some trends. Essentially, it puts organizations in a proactive — versus reactive — business mode.
5. Technology enables integrated risk management (IRM).
IRM is a strategic and collaborative way to manage risk across the organization. Technology is helping make IRM a more attainable reality since businesses are much more connected than ever before, allowing better decision-making based on a collaborative approach to managing risk. Organizations share data, technology and much more across company lines, and as a result, they also share risk management. Technology will continue to have a huge impact as more organizations take on this IRM approach to how they manage risks collaboratively.
It all revolves around the RMIS
Despite all the anticipated growth in technology and improvements in data collection and analysis, don’t expect anything to unseat the foundational RMIS platforms as the center of the RiskTech universe. Innovation and advancement within RiskTech integrations, however, will lift the tide for the industry, helping organizations that use data best ride the wave ahead of the pack.
Schedule an inquiry call with Redhand Advisors to learn more about how to get ahead of the data tidal wave and utilize advanced technology with your RMIS to advantageous outcomes.