Advanced insurance technology is already a part of the Property & Casualty business for both carriers and insureds. Obtaining insurance estimates is as simple as pressing a button, maintaining coverage is usually done via a smartphone app, and traditional insurance cards are mainly obsolete.
Today, investing in various forms of technology and platforms, like social media or insurance website design, is only the beginning of advanced marketing strategies employed in the industry.
In 2021, insurance technology is expected to develop even more. The speed of change in the P&C insurance sector is driven by digital insurance products and a defined omnichannel strategy for client care. Furthermore, insurance firms of all sizes are looking for evergreen solutions — technology that can grow and upgrade in response to changing needs and capabilities — to help them remain ahead of rivals.
While some of these technologies are currently in use by certain carriers, we anticipate becoming more widely used throughout the sector. Insurers seeking a competitive advantage can consider adopting one or more of these developing insurance trends.
New models and products customized
More than 80 percent of insurers’ premiums are currently spent on distribution costs. Digital models will make the insurance value chain intermediates obsolete since they rely excessively on human work.
Flexible coverage options, micro-insurance, and peer-to-peer insurance will become possible in the long future. Reinsurers are directly providing risk capital to digital enterprises, and legal frameworks will enable shorter value chains.
The connection between insurance companies will be rethought via lifestyle apps. By combining data from many sources, APIs create insight-driven solutions. APIs evolve. More precise risk assessments, tailored fees, long-term value for a better customer experience, and brand loyalty will lead to a greater understanding of consumer behaviors and fewer false claims.
AI and Claim Processing Automation
Robotic process automation (RPA) and artificial intelligence (AI) will take center stage with more data channels, better data processing capabilities, and progress in AI algorithms. For example, Lemonade utilizes AI and behavioral economics as crucial elements in its business model. While artificial intelligence eliminates brokers and paperwork, its economic, behavioral abilities reduce fraud and save time, effort, and cost.
Bots are widespread in front and back offices to automate policy maintenance and claims management to provide faster and more personalized customer service. For example, the US Primary Car Insurance Virtual Assistant answers customer inquiries about plans and payments. Jim, bot of claims by Lemonade, assesses and settles property claims in three seconds or less. SPIXII, a mobile insurance agent, interacts with customers through a mobile app and other messaging platforms to help them purchase the relevant products.
Artificial intelligence and automation considerably impact and improve company outcomes in customer experience, cost optimization, operational efficiency, competitiveness, and creative business models.
Advanced Analytics and Proactivity premiums will become more tailored due to new tech-enabled data sources such as the Internet of Things, mobile insurance apps, and wearables. With the market for connected devices anticipated to multiply in the next five years, property and damages insurers (P&C) will be able to extract real-time and accurate information on the loss risk for individual clients. This allows them to respond to timely and highly individualized therapies proactively.
Drone and imaging technology will help insurers obtain high-quality images to evaluate and analyze property remotely and accurately. Some big auto insurers in the USA utilized drones to assess the damage caused by Harvey Hurricane. An Australian insurance company could settle 90% of significant damage claims in 90 days using drones.
Moreover, insights will be generated from data set links that offer higher precision in individual risk profiles and protect insurers from risk exposure developments. For example, a US-based insurance firm utilizes predictive analytics to assess complex customer behavior, enhance pricing accuracy, and significantly reduce decision-making time. A U.S. insurer employs a telematics device to provide drivers with real-time feedback for safe driving. As a consequence, clients have saved up to 40% on insurance premiums.
The requirement for vast amounts of customer data to be handled in real-time via different insurance activities requires a secure and effortless transfer of data between businesses and many stakeholders.
Blockchain technology ensures secure and integral data management across a wide range of interfaces and parties. The system lowers all operational costs, including identification and signing, claims processing, fraud prevention, and reliable data availability. Additional benefits of blockchain include decentralized self-governing organizations (DAOs) and smart contracts in policy management.
The trends discussed above suggest that the insurance sector can generate new value worth billions of dollars. The key is to understand how and when to capitalize on this potential by utilizing current and emerging technology.