The recent advancements in tech are influencing every industry. And the Insurance Industry is not left behind in this. Though the implementation of new technology in this industry is not as fast as in other industries. The reason behind this slow implementation is that insurers are not able to get professional and trained people for this job, despite the fact that this is a multi-trillion dollar industry.
The traditional legacy systems are way complex and the companies are trying hard to modernize them. Companies want to develop new methods of doing their work while not sacrificing their traditional approaches, as because of them they are this successful today.
As the industry is lacking in new technology, new businesses in developing economies are making the most out of this time. As they are using new technologies to develop infrastructures that are digital-first. But people all over the world do not prefer the insurance industry over other areas of work. Because of this, insurers are lacking required skilled staff, which can help in bringing new innovations in the industry.
Here are some of the tech trends that will be defining the future of the insurance industry. Some of these are already implemented in some companies.
Table of Contents
Internet of Things (IoT)
When it comes to saving money on insurance policies, consumers usually do not have any issue in sharing personal information. With IoT, this sharing of data can be automated. IoT devices like wearable technologies and smart home components can share data with the insurers. This data can further be used to calculate rates and mitigate risk better. It can also be used to prevent any losses.
With IoT, better risk assessment can be done and insurers will be given the ability to influence their policy pricing. Also, IoT can easily support other technologies in the industry with its first-hand data.
Drones are an emerging technology, they have made their way into so many sectors and insurance is one of that. More and more remote control drones will be used by carriers in the near future. They can be utilized throughout the lifecycle of the insurance in the following ways:
- Risk calculation before issuing the policy by collecting numerous data.
- Preventative maintenance aiding.
- Assessing damages after a loss.
One of the greatest examples is the Farmers Insurance. Kespry drones are deployed to help in damage and risk assessment on homes. Roof inspections are done by the drones and then they upload the collected data to a cloud where it can be analyzed further. This is an example of the technologies that can be supported by IoT in the insurance industry.
In this tech, diverse data is collected by the insurers and then they analyze the data to predict the behavior of the customer. But with the new methods available, data accuracy can be improved using it. Predictive Analytics can be utilized for the following purposes:
- Triaging claims
- Selection of pricing and risk
- Trend anticipation
- Customer identification at the cancellation risk.
- Outliner claim identification
- Fraud risk identification
To improve accuracy, various technologies are overlapped. This is an interesting trend in insurance technology. Machine learning is a process in which data is processed by the computer system and they learn from that data. This learning is done without the constant supervision of a human. Machine Learning is said to be a branch of AI that is a bit more specific.
The processing of claims can be improved and automized with the help of machine learning. Most of the data is digital and is stored on clouds, so it can be accessed and analyzed by pre-programmed algorithms. This improves the speed and accuracy of the processing. And this automation can be used for processes like risk assessment and policy administration.
Just like drones, chatbots are also an emerging technology that is implemented in many businesses and sectors. Chatbots use artificial intelligence and machine learning to interact with customers. This interaction is not only seamless but it also saves a lot of time and cost of the insurance organization. A chatbot can handle customer queries on claim processes or policy application very conveniently. Only complex queries are forwarded to human agents, which reduces the cost of human resources.
Also, chatbots are available 24*7 on either text or call. This means more and more customer queries can be solved easily. That will ultimately lead to better customer relations of an insurance organization.
Social media data
Almost everyone is available on social media nowadays. And most of the social media users update their profiles regularly. Earlier, social media was used by the insurance industry just for advertisement and marketing purposes. But now, it has moved forward as a lot of data can be collected from the social media profiles of the customers. The data collected from social media can be mined to bring improvements in processes like risk assessment, fraud detection, etc. This way, completely new customer experiences can be enabled.
People can easily log-in to the insurance website using the credentials of their social media handle. This way, the company can keep track of all of its customers and also look for suspicious activities to avoid fraud.
Artificial Intelligence (AI)
Using the data collected from various sources, insurance companies can create personalized solutions according to the needs of the customers. This whole thing has become possible because of the use of AI in the insurance industry. Also, the claim processes can be made more efficient using AI as data can be accessed faster and without errors. The underwriting process can also be changed fundamentally with the use of AI.
Telematics can be considered as devices that are attached in the car and used for monitoring it. These monitoring devices can collect data about location, speed, accidents, etc. This data can be analyzed for determining the policy premium of customers.
The various benefits of using telematics are:
- Reduced costs of claims for insurers.
- Customer relationship carriers changed to proactive from reactive.
- Better driving habits are encouraged.