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We are going to explore the growing impact of technology on the insurance sector. We have spoken to a number of experts from the financial, tech and insurance sectors to discover what is standing behind the hype of InsurTech.
It’s a time of inordinate change in the insurance industry. Insurance companies are facing the challenges of the increasing demand for better customer centricity and customer experience. The advancement of technology offers the industry a very real chance to attune the insurer’s business plans to the market trends in order to produce customer-driven outcomes and to respond to regulatory demands. New technology-led providers, “InsurTechs,” have entered the insurance sector covering the digital needs of the customers and end-users. Strategic investment in InsurTech makes it possible for traditional insurance businesses to be innovative in their approaches and operations so as to take advantage of the digital transformation by:
Darius Kumana, Co-Founder & CPO at Wrisk, a UK-based InsurTech that offers contents insurance, says, “There are so many opportunities to leverage technology to unlock the competitive advantage and find efficiencies or change the customer experience within insurance. The entire value chain is ripe for change: frictionless disclosure, instant MTAs, subscription-based rather than annual policies, automating claims, the list goes on. Finding better ways to assess and communicate personal risk touches on a whole host of technologies from novel data sources and sensor data through aspects of machine learning and AI. Making this complex risk landscape easy to navigate and understand by customers is no mean feat.”
Wrisk is on a mission to change the way people think about and buy insurance. Wrisk sees the need for insurance to be connected to our lives, devices and to treat us as individuals.
There are some key trends that we have identified that we see that are shaping the industry and enabling traditional Insurers to stay competitive and capitalize on their investment in technology.
In this first blog post, we will discuss tech trends including big data, AI, IoT, Blockchain and their impact on hyper-personalization.
An omnipresent Data is the business differentiator for the insurance industry. With its exponential growth, the leveraging of structured and/or unstructured data and access to on-demand data by the insurer to make sustainable use of the data is a matter of business existence. The technology is now right here allowing insurers to focus on outcomes. That is, to process the accumulated data in order for insurers to find new customer segments, to drive timely insights into customer needs, to innovate products that would blend traditional products and preventative services together, for quick claims processing, to product development, and to enable targeted marketing; all are assets for becoming competitive.
In a hyper-personalized world where customer experience matters the most, emerging technologies offer options to improve customer service such as the application of blockchain for identity and transparency, mobile payments that remove barriers of adoption, AI for intelligent use of data that has been collated, wearables and sensors as a new mechanism of collecting data, all of which assist in understanding the customer at a new level in detail. Equipped with a comprehensive portfolio of customer information, insurance providers can manage fact-based risks and create targeted services and products specifically fitting their customer’s needs.
CASE STUDY. InsurTech in practice
As a real-life example, we have built a solution for an InsurTech customer in order to gain data-driven marketing insights utilizing machine learning algorithms. Now, sales and marketing teams can engage with potential clients on a new level, realize a personal approach to the fullest, and run targeted marketing campaigns while simultaneously reducing marketing expenses by applying machine learning algorithms. Sales reps and marketers approach the potential and existing clients with will-fitting actual messaging, based on getting super accurate marketing insights into the users’ behaviour by attaining advanced Customer Segmentation and Loss Ratio that identifies a “Perfect customer”.
The insurers take pains to become trusted providers and sell to demanding customers who are overwhelmed by the huge choice of insurance services. InsurTech harnesses big data cognitively to help discover accurate risk predictors without constantly and annoyingly asking people questions. That is, the value of data is captured, processed and analyzed to improve underwriting, to know the customer better, to potentially offer better products or services, all using the same insights and knowledge gained from this information.
CASE STUDY. InsurTech in practice.
Predictive analytics and the recommender system for insurance companies implemented by Avenga data scientists help draw in new customers and enhance insurance sales. The applied data mining and collaborative filtering techniques help identify suitable products for customers with the highest precision and recommend the most suitable insurance plans creating personalized user experiences.
Information pools powered by data science and advanced analytics allows insurers to hear their customer by making sense of unstructured real-time information (social posts, blogging, video, etc.) and to identify new opportunities. By targeting the desired customers and brokers with the customer segmentation using deep analytics, the insurers retain customers and increase value proposition chain/increase sales productivity. At the same time, careful data analytics is a potent instrument for revenue generation by entering into new profitable niches and markets.
An application of real life analytics by Avenga, for the global leading on-demand provider, is a comprehensive BI reporting solution paired with Tableau visualization and backed up with a specifically designed architecture and warehouse. This allows the insurer to seamlessly operate on all data across focused markets and departments. The customized reports enable instant intelligence-based business decisions while monitoring information across the whole system. What does it mean at the end of the day? High operational efficiency and minimum delays in decision-making.
→ Explore more how Avenga helps insurance service providers, as well as InsurTech companies, sustain digital innovations for customer engagement and business growth.
AI enabled by data is already on track and modifying the customer experience within the insurance industry. The startups and tech innovators employ machines, thinking like humans, to assist in scaling analytics across data types thus reducing underwriting risks, simplifying claims payout, securing data migration, and automating policy administration of increasingly complex scenarios. Artificial intelligence is the key for better consistent and efficient customer service, in terms of offering:
Full-scale insurance consultancy. AI makes personalized insurance solutions a reality by exceptionally accurate targeted product/policies recommendations. With 74% of consumers ready to get computer-generated insurance advice according to Accenture, the delivery of improved customer experiences 24/7 based on relevant customer insights and criteria is gaining more popularity.
Efficient process automation. Modern InsurTechs introduce solutions that actually take operational efficiency to the next level. Robotic process automation and AI techs help manage huge data volumes, parse and validate evidence faster and are way more accurate and free insurers up for core operations instead of performing some routine time-consuming underwriting or claims processing. This shortens cycle times and enables better regulatory compliance.
Fraud mitigation. According to stats, fraudulent claims greatly affect the industry profits and loss ratio. There are 350 cases of insurance fraud uncovered every day in the UK. That is why insurers tend to engage AI technologies to identify suspicious clients more accurately and take action quicker and more effectively.
Biometrical AI is a specific focus for security applications, as image and facial recognition have the real potential to influence claims processing and their validation. The ability to instantly recognize and analyze images and faces with 98% accuracy eliminates fraudulent claims and detect suspicious signals.
→ Read more about digital transformation in the insurance and finance sector in an interview with Fabian Van Lancker, Head of Customer Processes & BI at Swiss Life Germany
Connected devices starting from fitness wearables, smart appliances, sensors to vehicle telematics (vehicle systems with communication and safety features that improve navigation) are already marrying IoT to monitor policyholder’s driving habits, household issues, health patterns, etc. With big data revolutionizing the industry, insurers engage IoT technologies to make the underwriting process more precise, claims management more responsive and end up with a happy and satisfied customers. IoT, as a source of real-time precise data of a policyholder, helps to create a near-real picture of the customer. It means better risk assessment, improved loss controls and pricing policy management which result in costs elimination for the insurers and consequently, the customers will benefit from personalized offerings, simplified processes, better personal risks management, and quicker and more effective checkups.
This kind of data can also become an instrument for tackling claims fraud by linking medical conditions to accident outcomes.
AR is gaining in its presence in the insurance sector by remodelling the very concept of insurance with the help of computer-generated information. The use cases of the InsurTech AR (including VR, MR and ER) application for explaining insurance plans, estimating alleged damages, and giving risks warnings all allow insurers to apply interactive user engagement and consequently improve their services.
→ Read more on how to utilize the enormous potential in digital insurance marketing and sales.
Blockchain is a distributed ledger technology with advanced cryptographic techniques securing data, which is believed to be the foundation of new secure offerings within the insurance industry. The insurers adopt blockchain, for its comfortable secure access, to the distributed data for all parties in an insurance contract in order to improve data accuracy and build trust alongside lowering operational costs within transaction processes. Blockchain-based insurance systems can modify claims processing, especially in case of severe or catastrophic events. It can immensely spare the efforts of insurers and brokers processing volumes of documents supplied by claimants, assessors, lawyers, experts, etc. and accelerate secure data sharing, making it efficient and precise.
Insurance customers are ready for the transformation of the sector towards these new innovations. The almost daily appearing startups are vivid evidence of this. What lies ahead is a meticulous scenario implementing tech into the sector and with close cooperation between insurance and technology providers that speak each other’s language.
Learn more about the opportunities and challenges that the digital transformation offers established insurers. We have compiled the most important topics in a comprehensive overview on digital insurance for you, from customer proximity to new technology.