According to Investopedia, Insurtech refers to the use of technology innovations designed to identify and leverage savings and promote greater efficiency across current insurance industry models. With the current belief being that the insurance industry is ripe for innovation and disruption, large insurance firms are looking at ways to offer ultra-customised policies and are using new streams of data from connected digital devices to alter premiums based on customer behaviour.
If industry experts are to be believed, these digital technologies being leveraged by more savvy players are set to totally revolutionise how existing insurance providers compete. The introduction of these innovations will bring about changes similar to those seen in the banking space when technological innovation really started to have an impact on the financial services space.
Tech enabled loss prevention: As modern technology advances, insurers are becoming better equipped to predict an event or outcome occurring before it even happens. One way that local insurer, Discovery, is doing this is by using high-tech tools like drones equipped with thermal cameras to easily identify any structural weaknesses or problems in a building that could start fires. In this way, insurers are becoming active risk managers.
Automated claims: If you’ve ever sat on the phone with your insurer trying to handle a claim, you’ll know how time-consuming, and frustrating it can be. By putting the claims process in the hands of the customer, these self-service approaches see claim reviews being handled automatically. Modern technology means that the claims process does not have to go through a human consultant as machines are capable of facilitating the process.
Leveraging lifestyle apps: As lifestyle apps become the norm, insurers can use this information to better understand their customers’ behaviour. This results in more informed risk assessments and personalised premiums (discussed below). These apps also build brand loyalty, as customers buy into a community/ecosystem offered by their insurer and reap rewards and benefits as a result.
Personalised premiums: Greater tech enabled insight gives insurers a clearer image of their customers and each individual’s risk profile. With all of these new sources of data from wearables, telematics, the Internet of Things (IoT) and smartphone apps, gone are the days when people of the same age and gender, with similar cars and living in similar areas paid the same premium. Today, insurers will consider a far broader range of factors when determining how much to charge for a premium, making data science a key aspect of insurance operations going forward.
The insurance industry may have been a little slow off the mark, but today, technology and insurance are becoming firm friends. As customer needs evolve, more and more insurers are realising just how important it is that they jump on the digitisation bandwagon. To find out more about these and other digital trends affecting your industry, subscribe to our monthly newsletter below.