Advanced insurance technology is already an integral part of the damage and loss industry for both insurers and insurers. Getting an insurance quote is as easy as clicking a button, managing your insurance coverage typically through a mobile app, and paper insurance cards are mostly a thing of the past.
Insurance technology will become more mature in 2021. A defined omnichannel approach to digital insurance products and customer service is driving the pace of change in the P&C insurance industry. And insurance companies of all shapes and sizes are looking for evergreen solutions, a technology that can scale and update with changing needs and capabilities, helping them stay ahead of their competitors.
Some of these tools are already in use by some carriers, but are becoming more common across industries. Insurers looking for a competitive edge should consider embracing one or more of these 11 emerging insurance technology trends.
Many insurers use predictive analytics to gather a variety of data that helps them understand and predict customer behavior. However, there are new methods you can use to improve the accuracy of your data.
In 2021, insurance companies will be able to use predictive analytics to:
- Pricing and risk selection
- Identify customers at risk of cancellation
- Fraud Risk Identification
- Claim classification
- Identify outlier claims
- trend forecast
Adopting predictive modeling tactics has been proven to increase revenue and accuracy for many P&C insurers. A 2018 study by Valen Analytics found that companies that use analytics and predictive modeling experience 3 to 9 percent better loss rates than companies that don’t. They also reported that insurers using predictive analytics increased their direct written premiums by 53% compared to the market average growth rate of 18% over the same period.
Artificial Intelligence (AI)
The use of artificial intelligence (AI) is expanding rapidly, making AI-enabled devices more common in homes around the world. According to a Deloitte Digital report, as of 2017, over 35.6 million people in the U.S. had voice-activated AI assistants, and global spending on these technologies is expected to reach $47 billion by 2020. Can the insurance industry benefit from technology?
Consumers are always looking for a personalized experience, especially when buying something as important as P&C insurance. AI gives insurers the ability to create these unique experiences to meet the rapid demands of modern consumers. The key is to use the power of AI to harness the vast amount of consumer data that can be used to create personalized experiences based on an individual’s actions and habits.
In addition, AI can help insurers improve claim processing cycles and fundamentally change their underwriting processes. AI also gives insurers faster access to data, and eliminating the human factor allows for more accurate reporting in less time.
According to a report by PwC, the initial impact of AI is primarily related to increasing efficiencies and automating existing customer-facing acquisitions and billing processes. Over time, the impact will become more profound. You can identify, evaluate and undertake new risks and identify new revenue streams.
In the insurance technology trend in 2021, various technologies will be superimposed in the name of improving accuracy. According to Forbes, “Machine learning is technically a branch of AI, but it’s more specific. Machine learning is based on the idea that you can build machines that can process data and learn on their own without constant oversight.”
Machine learning can automate as well as improve claim processing. If the file is digital and accessible via the cloud, pre-programmed algorithms can be used to analyze the file, increasing processing speed and accuracy. This automated review can be used not only for claims, but also for policy management and risk assessment.
When it comes to introducing machine learning capabilities, you don’t want to be in the dust. All signs indicate that machine learning is becoming a common tool in insurance. According to the SMA survey, 66% of P&C insurance executives believe machine learning has the potential to have a significant impact on the commercial sector, while 53% of executives believe it has the potential to have a significant impact on the private sector.
Internet of Things (IoT)
Most consumers are willing to share additional personal information when it means savings on insurance policies, and the Internet of Things (IoT) can automate much of this data sharing. Insurers can use data from IoT devices, such as various components of smart homes, automotive sensors and wearable technology, to better determine rates, mitigate risk and prevent losses in the first place.
P&C insurers cannot afford to delay leveraging IoT capabilities as they predict that the global IoT insurance market will be worth $42.76 billion by 2022. IoT will augment other insurance technologies with direct data to improve the accuracy of risk assessment and provide more benefits to insured persons. It provides the power to directly influence policy pricing and gives insurance companies the opportunity to improve accuracy and profitability.
Insurtech, and more specifically insurtech companies, leverage the latest insurance technologies to reduce costs for both customers and insurers, improve operational efficiencies and improve the overall customer experience. This may sound similar to a digital insurance product that has been around for years, but insurtech takes these capabilities to the next level.
Insurtech investments amounted to approximately $4.9 billion in 2018. This is because “it is changing the way Insurtech is capturing and using real-time predictive data to respond to emerging risks and spur the development of insurance products that enable customized coverage and pricing solutions to respond to macro-risks such as climate change or cyber risks. and drive future resilience.”
First, what is blockchain data? It is, according to Forbes, a decentralized peer-to-peer ledger of record called virtually incorruptible blocks. Every block is linked to the previous block and has a time and date stamp. It is self-managed and requires no intermediary coordination. Blockchain is what makes cryptocurrencies like Bitcoin possible.
Blockchain as an insurance technology is still in its infancy, but insurance companies would be wise to stay ahead of the game. Experts believe the impact will be as follows:
- consumer trust
- improved efficiency
- Improved claim processing
- Fraud detection and prevention
According to a recent PwC report, blockchain presents a $5 billion opportunity for P&C insurers. For industries that rely on a lot of secure data, blockchain technology can “remove the costly overhead of triggering the transformation of business transactions and information exchanges on one side and validation on the other. Potential benefits include: No more costly or error-prone manual re-entry of data, one mutually trusted version of the truth is included.”
Social Media Data
Social media and its role in the insurance industry are evolving beyond marketing strategies and clever advertising. Social media data mining improves risk assessment for P&C insurers, enhances fraud detection, and enables entirely new customer experiences.
Consider, for example, the Dutch insurance company Kroodle. The process of interacting with customers is entirely through social media. Customers log in using their Facebook credentials, submit claims, get quotes, and request other services through the Facebook app.
Insurance technology may also utilize social media to investigate fraud. Insurers can find discrepancies by looking at the insured’s social activity and comparing it to claims records. The Morgan Stanley report cited a tool used by carriers to investigate claims throughout the valuation process, which examines social relationships between the parties involved and monitors day-of-loss activity for red flags.
Automated policies continue to be affected by telematics features. In insurance technology, think of telematics as wearable technology for automobiles. Cars can now be equipped with monitoring devices (Snapshots of Progressive) that measure various metrics such as data about speed, location, accidents, etc., all monitored and processed by analytics software to help determine insurance premiums.
The benefits of telematics are numerous for both the insurer and the insured. P&C Insurance’s telematics:
- encouraging better driving habits
- Reduced insurer’s billing costs
- Changing the carrier-to-customer relationship from reactive to proactive
Some estimates suggest that by 2025, 95% of all customer interactions will be driven by chatbots.
Leveraging AI and machine learning, chatbots can interact seamlessly with customers, saving everyone in the organization time and ultimately money for insurance companies. Bots can guide customers through policy enforcement or claims processes to schedule human intervention on more complex cases.
Geico’s “Kate” is a virtual assistant who communicates with customers via text or voice, assisting you with policy questions and coverage inquiries, available 24/7. More insurance companies are investing in technologies like this, and chatbot capabilities are expected to increase in 2021.
Today’s insurers need to be able to manage their software platforms, deploy updates, and launch new products efficiently and accurately. This process required experienced developers or IT teams, but new advances in software-specific coding platforms have made this process easier than ever.
Low-code configuration tools enable IT professionals as well as business stakeholders to update and manage apps and software using intuitive and user-friendly drag-and-drop functionality. Moderate app and software experience allows insurers to rapidly implement new and rich user interface (UI) features that customers demand in much less time than is typically required.
The main benefits of low-code development are:
- Significantly faster time to market
- Extensive app development across the organization
- Ability to build extensible base functionality
- Empowering employees to control their work/offers
According to a survey by development company Mendix, 70% of low-code users reported learning how to develop an app within a month, and 72% of low-code users reported developing their own app in three months. With this kind of speed and easy-to-use interface, app development can become an all-out initiative.
Insurance companies are flying, or at least their drones are. Unmanned drones are an insurance technology tool that will be used more by carriers in 2021. It can be used at different stages of the insurance life cycle. In other words, we collect data before issuing insurance policies to calculate risk, aid in preventive maintenance, and assess damage after loss. .
Farmers Insurance is a good example of deploying Kespry drones to help assess risk and damage to homes. These drones perform roof inspections and other assessments, and the drones send data to the cloud for analysis. This is another example of IoT and other technologies working together in the insurance industry.
P&C carriers are always looking for the latest and greatest developments in insurance technology. Not only does it help you stay ahead of your competitors, but it also helps deliver the experience customers expect in the modern marketplace. With all innovations coming to market in recent years, from smart home technologies to insurance technologies and microservices, 2021 will be a very exciting year to observe insurance technology developments.