Four benefits of digital connectivity for credit insurance

Digital connectivity has the potential to transform the credit insurance industry. What could credit insurance look like in the future?

For the credit insurance industry, collaboration between stakeholders has long been the key to shared success. With the recent surge in technological advancements, collaboration through digital connectivity has emerged as a tool for seamless data exchange with powerful benefits. Today, we explore four benefits the industry can look forward to.

Holistic credit insurance risk assessments

Thanks to today’s rapidly advancing technology, data from sources such as financial statements, transaction records, and market trends no longer need to exist in isolation of one another. In traditional credit insurance operations, these data silos make the process of risk assessment complex and inefficient. Better visibility ultimately means less risk, but to achieve this, credit insurers will need to be able to harmonise multiple sources of data to create a 360-degree view and use solutions (such as artificial intelligence) to filter out any data that is not relevant.

Digital credit insurance platforms now allow for the fast and accurate interoperability of multiple sources of data. This ultimate connectivity not only saves insurers valuable time, but it also gives them a much more holistic and accurate view of each assessment, so they can tailor their coverage accordingly.

Credit insurance automation

Digital connectivity will enable the credit insurance industry to become more automated. Currently, the industry is still largely manually operated, while other industries have rapidly evolved to embed automation, becoming more efficient and agile as a result. Through automation, the credit insurance market will become more liquid, allowing for faster coverage, increased competition, better pricing and simpler solutions that are more suited to customers' needs.

Smart automation tools leveraging artificial intelligence and machine learning are increasingly becoming commonplace and relied upon by many industries, including financial services. For credit insurers and their customers, the main benefits of these new technologies are greater efficiency and proactive risk management. Smart automation will allow credit insurers to analyse vast datasets as they occur, automate their underwriting processes, accurately identify risks, and possibly even anticipate future risks.

When incorporated into a digital credit insurance platform, smart automation tools can be transformational. However, for credit insurers to embrace these tools and realise the full value they can bring to their business, their employees, and their customers, a cultural shift will be required.

Rapid policy monitoring and alerts

Rapid monitoring will give credit insurers a reliable way of monitoring their risks and exposures with substantially less effort, as well as faster response times and much better anticipation.

This is particularly valuable for the credit insurance industry, where the objective is to anticipate default before it occurs. Digital credit insurance platforms can set instant alerts and notifications based on predefined triggers, helping insurers and their policyholders to manage risks more proactively than previously possible. Now, if a debtor's financial indicators change, the insurers will be alerted as soon as it occurs, avoiding any lag in response time, so they can be better-informed overall, and better able to support their customers in managing their credit risk – which is ultimately what credit insurers are here for.

Reduced risk and increased trust in credit insurance

With increased ability to share data, the credit insurance industry can build more collective value into its overall value proposition. Sharing data can provide richer insights into trends and more accurately detect fraud, and if the industry can help to reduce risk overall, it will in turn be able to grow its capacity to support financing new projects and attracting greater investment.

Overcoming challenges to digital connectivity in credit insurance

Despite the promising evolution that lies ahead, the credit insurance industry faces several obstacles to achieving digital connectivity, including financial investment, mitigating evolving cyber threats, and establishing interoperability. If these can be achieved, the industry and its users stand to unlock some powerful and enduring benefits.