How Insurtech Is Creating Advancements For The Future Of Insurance
Technology has advanced tremendously in the last few decades. Today, groundbreaking advancements continue to transform long-established industries, allowing them to think outside-the-box and do things differently. For better or worse.
Insurance is one of the many sectors that technology is changing for the better. The industry’s archaic processes make it ripe for innovation and disruption, similar to the banking industry. However, strict regulatory bodies and compliance standards have made the new ways of doing business in the digital era difficult to adopt.
That’s why many insurance professionals and policyholders alike are still unaware of what insurtech is and how it’s shaping the future of the industry.
What is insurtech?
Insurtech, short for insurance technology, is a term used to refer to technology designed to enhance the operations of insurance firms and the insurance industry as a whole. Insurance companies are leveraging technologies such as big data, artificial intelligence, consumer wearables, and smartphone apps to transform the way they do business.
Over the past decade, the insurance landscape has shifted dramatically. Demand for new technology and the talent to create it knows no bounds. Consumers crave speed, convenience, and transparency more now than ever before.
How does insurtech work?
Buying insurance has long been viewed as a difficult, dreaded experience.
- Dealing with pushy sales agents who are incentivized by commissions, not the customers’ best interests.
- Navigating piles of paperwork that are filled with confusing jargon the average person doesn’t understand.
- Spending weeks (if not months) going through the process, only to find out you’ve been denied coverage anyways.
People didn’t just procrastinate fulfilling their coverage needs; they would avoid buying insurance, period. Insurtech is changing this for the better by:
- Making coverage more accessible.
- Lowering costs for insurers and policyholders.
- Expediting the issuance of your coverage.
Today, you can conduct research, compare your options, and buy insurance online from the convenience of your phone or computer. The impact of insurtech can be found in nearly every corner of the insurance sector.
The convenience brought about by insurtech allows individuals and businesses to access insurance products and services quickly, saving precious time and eliminating the age-old frustrations of buying insurance. Customers not only have more insurance options at their disposal, but they can also tailor insurance coverage to meet their unique needs.
Individuals can find new benefits from insurers through apps, auto-monitoring devices, and wearable activity tracking tools. Small business owners can shop for different types of coverage all in one place. Just about anyone can complete an online application in a matter of minutes.
Unbiased comparison sites and slick application processes are great, but they’re only the tip of the iceberg. Here are five more key applications of insurtech.
Customer identity verification
Insurance companies, reinsurers, and brokers must fulfill Know Your Customer (KYC) requirements on all of their counterparties. This means collecting a considerable amount of data on their customers to verify that they are who they say they are. As you can imagine, identity verification has traditionally been quite time-consuming.
Customer identity verification is one area that insurtech offers relief.
Blockchain technology can be used to develop a single version of claim documents that can be evaluated and monitored by underwriters in real-time. This means that blockchain technology can allow all parties involved in a claim to manage the process simultaneously.
Blockchain also presents the opportunity to integrate all documents created in the claims process and make them available to underwriters. Not only does this make it easier for underwriters to manage claims, but it also reduces the cost of administrating claims.
Another way in which insurtech is making claims management easier is through smart contract elements that allow for the automation of many processes. This brings about several benefits like increased flexibility and transparency, as well as improved relationships between customers and insurers.
Smart contract formulation
Insurtech has also made it possible for insurance companies to develop paperless smart contracts. A smart contract is a blockchain-based contract between two or more parties. Automated blockchain protocols then facilitate, authenticate, and enforce negotiation or performance of a contract.
For example, consider a life insurance policy that pays an amount to a designated beneficiary following the death of the policyholder. The smart contract performs instantaneous checks on online death registers to automatically determine and trigger the payout.
Smart contracts increase the efficiency and speed of claims management. Agreements registration, authentication, and implementation have become much easier as they can be enforced by computer protocols without the intervention of a claims assessor.
Not only does this drastically reduce the risk of fraud, but it can also increase customer satisfaction. Technology allows insurance companies to manage insurance claims more responsively and transparently.
Fraud detection and risk prevention
Fraud accounts for about 10 percent of the property and casualty insurance industry’s incurred loss adjustment expenses annually. As a result, companies invest millions of dollars every year to ward off insurance fraud.
Insurtech can also help detect fraud and eliminate errors by presenting a decentralized digital depository. This means checking the authenticity of policyholders and their claims and providing complete transaction history. It can prevent the duplication of transactions, eliminate third-parties and document all transactions for public records.
Insurtech is also being used to streamline payments of insurance premiums and claims. For example, take auto insurance policyholders who have an account from which payments are drawn continuously in proportion to the miles they have driven. The telematics system in each autonomous vehicle records and conveys the miles driven by the vehicle instantaneously, and the premium is automatically calculated and paid.
Bottom line: The future of insurance is bright
Insurance isn’t the only old-school industry experiencing a significant period of innovation and disruption. But it may be the one that needs it the most.
From online application processes and automated underwriting to claims management and fraud prevention, insurtech has already made major strides. Lower costs, higher operational efficiency, and better customer experiences are just a few of the benefits of insurtech the industry has to look forward to.
Inmediate is an insurtech startup in Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger and NLP, and provides an insurance processing that is fast, cheap and flexible. That makes for better processes, lower costs, improved time to market and new revenue opportunities.