Extensive digitalisation and automation have placed insurers in Australia and globally on the verge of “a major productivity boost”, a new report from Allianz says.

The annual Global Insurance Report says the industry’s embrace of digital tools and other technology solutions during the year-long pandemic disruption has accelerated technology migration.

“New technologies are revolutionising not only the operations and sales processes of insurance companies, but also the assessment and prediction of risks,” the insurer says.

“The industry is on the verge of a major productivity boost, thanks to extensive digitalisation and automation.

“All these developments will have an impact on the pricing of risks and thus on the development of premium income.”

According to the report, the digital shift is irreversible as consumers have come to expect more, having learned to appreciate and love the innovative, fast, and personalised offerings of digital providers in other industries.

They now apply such standards when it comes to insurance, the report says.

“However, this is by no means synonymous with a run on traditional insurance policies by customers,” the report says. “Rather, the opposite is likely to be the case.

“This means that insurers face no less a task than redefining customer engagement and experience, areas in which they have traditionally not exactly shone.

“One way to do this is to build eco-systems that offer not only insurance products but also related services, such as data-based services in mobility or consultations, prescriptions and self-management tools related to health.”

The report also lists crop insurance as an example where new business models combined with new digital technologies can change many insurance markets for the better.

Remote weather monitoring, mobile phones, big data analysis and smart contracts have made it possible for insurtech projects to develop crop insurance for the agricultural community, which faces increased risk from climate change-linked weather events.

The report says with remote weather monitoring, insurance companies can reduce the cost of in-person assessments and monitoring in favor of cheap and precise weather data.

It says mobile phones are a tool for connecting farmers with financial services and facilitate payment transactions in the event of crop loss due to a weather event while big data can improve underwriting practices and provide relevant advice to both farmers and insurance companies.

“The beauty of crop insurance in the digital age is that farmers do not need to file claims or go through the painful process of requesting payment from their insurance company,” the report says.

Click here for the report.