Insurance technology or insurtech is the use of technological innovations that are used to help insurance companies streamline their operations, provide quality services and even save money. A lot of new technologies like blockchain, artificial intelligence, etc. are utilized in insurance and are being called insurtech. A lot of new companies are utilizing the power and potential of technology. Insurtech has redefined business paradigms and disrupted all the segments of the industry. This development shows no signs of slowing down and a lot of new businesses are emerging so that they can leverage insurance and technology. For example, it can process a large volume of data related to customers. This data is compared, analyzed and this results in personalized solutions for customers. It helps right from claims document processing, document creation, and even responding to customer queries.AI is also used to forecast sales results, manage claims and analyze risk policies. The insurance technology is getting popular day by day and its global market value is expected to reach $227.5 Billion by 2026, showing a compound annual growth rate of 24 %.
Machine learning is a branch of artificial intelligence and is a critical aspect for a lot of insurtech companies in several ways. This industry, like all the others, is flooded with data with an increasing number of sources like documents, wearables, social media, browsing activities, etc. Also working with semi-structured and unstructured data can be very difficult. Thus, insurance companies struggle in deriving proper value from the data. Machine learning comes into the picture over here. It can work efficiently with the volume of data. It allows businesses to calculate risks and generate personalized rating assessments. It is also used by a lot of insurance companies to boost their customer service, operational optimization as well as efficiency.
This popular technology has a lot of practical uses and applications. Blockchain insurance technology provides room for automated collection of data and analysis in real-time. This has resulted in making the claims process faster and even cost-effective. A lot of uses of Blockchain right from handling claims, KYC, reinsurance, fraud prevention and detection are being implemented by companies across the globe. According to a survey over 90% of insurance agencies have implemented blockchain to a certain extent. However, to accelerate and facilitate the adoption of blockchain, agencies can collaborate with technology companies who help them facilitate these new changes.
A software technology used for building, deploying and managing software bots that can imitate the actions of humans. A lot of agencies are turning towards emerging insurance technology practices for streamlining enterprise operations and also reducing costs. The process of robotic process automation eliminates the repetitive, tedious tasks and frees up the employees to focus on more work that is valuable. It also helps in underwriting the policies, onboarding and processing of claims. The RPA systems help insurance companies to reduce costs, increase their efficiency, deliver profits and provide high engagement. It also provides an avenue to explore more innovations in the industry.
One of the most important and commendable insurance technology trends is Advanced analytics, also known as predictive analytics. It means the usage of statistics and some techniques to determine certain outcomes and future performances. This is based on some past data and some current information. The insights from these analytics can help insurers in a lot of ways. For example, it can be used to identify insurance claims that may lead to heavy losses. More streamlined processes and better claims management are the top benefits here. However, these adoptions are still in their early stages. But the future of insurtech looks promising, and it will help insurers deliver more profitability, better efficiency and more engagement.
IoT /Internet of things is a system of devices across the globe that are connected to the internet. This giant network of connected things leads to connecting individuals, helping you share data worldwide. For example Liberty Mutual, an insurance company, has forged a partnership with Google’s Nest. They have implemented a strategy where they connect smoke alarms in houses. This enables customers to reduce the risk of fires. This in turn reduces their home insurance premiums. Nest informs the customers when there is smoke or carbon monoxide, by alerting their phones. The split spectrum sensor looks for quick or slow fires. Liberty will send 99 $ Nests to customers free of charge and it will take up to 5 % off customer insurance premiums once the application is installed. This is one of the best examples of IoT in the Insurance industry.
IoT has emerged as a very useful insurance technology helping companies streamline field operations, calculate risks accurately, improve customer engagement and also prevent disasters.
A prime example of emerging insurance technology are Chatbots. They are engaging customers on a variety of platforms like smartphones, laptops and desktops. Here customers can ask questions or inquire about the services in different languages and receive appropriate responses without any errors, delay or human bias. This helps insurance businesses learn about customer behavior, retain existing businesses and also acquire new customers. These smart bots are also very helpful in encouraging cross-selling and upselling. A one-step platform to gather information from customers to send them to decision-makers. These chatbots keep the customers satisfied, informed and even engaged. The communications are mould according to the past interactions with customers making them more valuable. A lot of companies are moving towards chatbots to improvise their customer service and generate efficient outcomes.
Technology in Insurance has revolutionized the methods in which frauds are detected and prevented. A lot of technologies like machine learning can easily detect advanced frauds that can occur across a heavy volume of information. They have learned to adapt to new and unique threats while you generate minimum outcomes. Apart from this, there are also other insurance technologies like Blockchain, AI and IoT that can be utilized for fraud detection. A considerable reduction in fraudulent claims with the help of solutions availed from a collaboration of insurance and technology.
Risk management was done traditionally before the advent of technology into insurance. But it was balanced on the history of claims. However, AI and ML have opened up new opportunities to analyze customer behavior and to make better data-driven decisions. The access to real-time data allows insurance businesses to perform advanced analytics and also help insurance businesses make automation in risk factor monitoring. This leads to accurate and speedy decision making. Predictive analytics offers cognitive insights and granular visibility into risks. For example, it alerts insurers regarding any extra factors that need to be taken into consideration. Data analytics and ML algorithms are used to complete the risk profiles of the insured. This helps a lot in improving risk efficiency.
There has been a tremendous overhaul in terms of technology in the last decade. The insurance industry is one of them and AI-powered underwriting helps the agencies to overcome a lot of manual barriers that come connected with manual underwriting.AI reduces the incredible potential for human errors as well as bias and prejudices all the while making room for operational excellence. It has been predicted that AI and ML will become self-reliant, completely removing the human factor from insurance decisions. Apart from this, another technology is Big Data. For example, brokers can compare the driving behavior of the policyholder with a lot of big data sets for predicting the risk accurately. It also helps personalize policy for an individual. A lot of emerging companies are already leveraging the benefits of technology and data to stay ahead of their competition.
In the future insurance technologies will touch every segment of business operations and segments to make them potentially productive.So, insurtech is now not only a key feature but a necessity if you want to keep your business afloat in this digitally competitive age.
Lucent Innovation is a full-service software design and development company and an expert e-commerce solution provider. We create custom applications for our clients leading to an improvement in the efficiency, increased growth and profitability of the business. We also build e-commerce websites that are ready to sell, scale and grow.
Contact us for your next project!
Yaani PatelJuly 22, 2022
Ashish Kasama & Vedika PandeySep 14, 2022