In an industry historically defined by tradition, paperwork, and face-to-face interactions, the insurance sector is now undergoing one of the most significant transformations in its history.
In an industry historically defined by tradition, paperwork, and face-to-face interactions, the insurance sector is now undergoing one of the most significant transformations in its history. Digital technologies are not only changing how insurance products are sold and serviced, they’re also redefining what insurance is and how it functions in a digital-first world.
Driven by changing customer expectations, technological advances, and rising competition from agile insurtech startups, insurance companies are now investing billions into digital transformation initiatives aimed at streamlining operations, enhancing risk assessment, and delivering more personalised services.
Customer-Centric Transformation
Today’s customers expect the same level of convenience from their insurance provider as they do from e-commerce platforms or digital banks. They want fast, mobile-friendly access to policies, real-time claim updates, and 24/7 support. To meet this demand, insurers are redesigning their customer journeys with a digital-first mindset.
Mobile apps now allow policyholders to buy or renew policies, submit claims, and chat with virtual assistants in minutes. Chatbots powered by AI are answering routine questions, freeing up customer service agents to handle more complex cases. Video conferencing and digital signatures have replaced in-person meetings and paperwork.
“Customer loyalty now hinges on user experience,” says Alma Ribanović, Group Practice Leader Affinity at GrECo Group. “A smooth digital experience can determine whether you keep a client or lose them to a competitor”.
AI, Automation, and Analytics
Artificial intelligence and machine learning are at the heart of this transformation. In underwriting, advanced algorithms analyse vast datasets – ranging from credit scores and medical history to real-time driving behaviour – to produce personalised risk assessments in seconds. This not only speeds up policy issuance but also improves pricing accuracy.
Claims processing, traditionally a labour-intensive and time-consuming task, has been revolutionised through automation. Some companies now use drones and AI to assess damage in property claims, particularly in disaster-struck areas. Machine learning models can detect patterns of fraud with greater accuracy than manual audits, helping insurers reduce losses.
“AI enables us to shift from reactive claims management to proactive risk prevention,” stresses Ribanović. “It’s about predicting and preventing losses, not just insuring after incidents.”
Insurtech and Ecosystem Innovation
A wave of insurtech startups has shaken up the industry by offering simple, digital-only insurance products tailored to modern lifestyles – such as microinsurance for travel, gig workers, or smartphones. These startups, unburdened by legacy systems, can iterate quickly and adapt to customer feedback.
Traditional insurers are responding by forming partnerships, acquiring tech firms, and launching in-house innovation labs. For example, Allianz has invested in a platform offering on-demand insurance for personal items, while AXA has integrated AI-driven health tracking into its wellness programmes.
Many insurers are also integrating with broader ecosystems, embedding insurance products into real estate platforms, travel booking sites, or e-commerce checkouts. This shift toward embedded insurance reflects a broader trend where coverage is offered as part of another transaction, making it more accessible and context relevant.
Challenges and the Road Ahead
Despite impressive progress, the path to full digital transformation is not without obstacles. Legacy systems, often decades old, pose integration challenges. Cybersecurity threats have intensified with the digitization of sensitive personal and financial data. Moreover, the shift requires a cultural change within organisations, emphasising agility, data literacy, and continuous innovation.
Workforce transformation is also crucial. As routine tasks become automated, insurers must retrain employees for higher-value roles in data science, AI oversight, and digital customer engagement.
Governments and regulators are adapting as well, introducing frameworks that support digital operations while ensuring consumer protection and data privacy. Initiatives such as open insurance – modelled after open banking – are being explored to promote data-sharing and innovation.
A New Era for Insurance
As the digital transformation wave continues, it is clear that the insurance industry of tomorrow will look vastly different from that of the past. Companies that embrace change, invest in technology, and prioritise customer-centric innovation will not only survive, they will lead.
Alma Ribanovic
Group Practice Leader Affinity
T +43 664 962 40 17
