Technology That Makes The Insurance Industry
The days of just a piece of paper and a promise are long gone for the insurance industry. Policyholders, still skeptical of traditional insurance policies and hidden terms and conditions, increasingly expect transparency and efficiency from their insurance providers. And why not? That is exactly what they deserve. The technology behind Insurtech is making these changes possible and enabling mass transformation.
Changing markets and customer demands have led the insurance industry to move away from an out-dated, policy-led framework to an industry that places the customer first. InsurTech has been at the heart of this transformation, noticeably in home insurance. Home insurance is not a one size fits all, and smart home technology consistently provides customers with added value, giving customers insight into their homes at all times.
To connect customers with their homes, Smart Home Insurance uses smart technology such as cameras, sensors, and monitors as part of an insurance package. It combines an insurance policy with technology so homeowners can monitor their homes 24/7, ensuring that any unusual activity is identified early on. It is estimated that there are 3.2 billion smartphones in use in 2019, and with people increasingly become reliant on their mobile phones, Insurtech, such as smart home insurance has enabled customers to be connected to their homes, wherever they are in the world, as the smart home tech will automatically send a notification to their smartphone or tablet if any suspicious activity is detected. Continual contact with their homes encourages customers to take a proactive approach to home security and protection, which allows homeowners to detect problems early on, minimizing damage. This preventative approach also provides customers peace of mind, something traditional insurers are unable to offer.
InsurTech has revolutionized the way people use and purchase insurance and will continue to disrupt the insurance industry in years to come. Taking a closer look at the key developments driving the InsurTech space, it is impossible to ignore the impact- blockchain, the Internet of Things, and artificial intelligence and machine learning are having on the industry.
Blockchain is revolutionizing countless industries based on its promise to cut costs, increase efficiency and provide an overall positive change to society. The uses for blockchain within the insurance industry are countless. For example, it can enable smart contracts, which are self-enforcing agreements embedded in computer code which contain a set of rules which both parties agree to. Once these rules are met by both parties, the contract is automatically enforced. Smart contracts allow for increased speed and cost-efficiency, as well as heightened visibility into a contract’s premium payments and coverage. They can deliver notifications once payment is made, improving transparency and also enable users to keep track of the contract and its performance in real-time.
An additional benefit of blockchain within the insurance industry is streamlining the claims process. Traditionally, processing insurance claims involve the cooperation of insurance companies as well as third-party companies, a slow manual process that leaves room for human error. Blockchain streamlines this process by collecting records from multiple companies, which in turn saves time, as well as reducing the chance of human error. Improving the speed and efficiency in which customers can make claims can create a much more enjoyable experience for customers, generating repeat business.
Internet of Things (IoT)
Improving efficiencies is a key focus within the InsurTech industry. Through the Internet of Things (IoT) and data collection, InsurTech firms can provide personalized communication, reduced risk, and improved customer experience. IoT includes devices such as wearables, sensors, and telematics. The adoption of IoT by home security systems and InsurTech companies has resulted in smarter home security systems. Leak sensors, door and window sensors, and smart fire alarms have been introduced into the home to help minimize damage caused by an unexpected disaster, such as theft, fire and water damage. This gives customers the ability to take a proactive and preventative approach when protecting their homes.
Smart housing was initially met with reservations due to the predicted size of the market. However, since the introduction of smart devices, the market for smart homes have mushroomed. It is estimated that a total of 50 billion networked devices will be in operation by 2025. Networked devices have sensors and automatic activation functions, which can be installed easily and efficiently and transfer data to the providers in real-time as well as triggering reactions or services.
Furthermore, the increased use of IoT allows for reduced costs through increased efficiency and optimization of resources, as well as improved safety through prevention. Additional benefits of integrating IoT within the insurance industry is the ability to determine risks with greater accuracy. Traditionally, insurance companies have relied on indicators such as age, addresses to determine premiums. Through the IoT and network devices, insurers can collect data that is specific to the customers, which ultimately builds better relationships and improves a customer’s overall experience.
Artificial intelligence and machine learning
AI is yet to fully seize its full value within the InsurTech space. AI is a broad term for data analytics processes and is currently being used in home security systems through a facial recognition functionality that can identify and differentiate between a homeowner and criminal. Cameras identify a moving object and compare the images with pre-approved and uploaded images and when these images do not match, the home security system activates the alarm, and the homeowner is immediately informed. AI is also being used to improve integration with voice systems and make interactions between customers and voice assistants such as Amazon Alexa and Google Home seamless.
However, there is still room to grow, as AI is yet to reach its full potential in home security systems and Insurtech. AI can enhance security systems though learning the habits and preferences of the homeowner, adjusting systems to accommodate the homeowner’s normal behavioral patterns as well as the occasional quirks. AI is also believed to better predict and identify false alarms, using existing databases and initial pre-assessments, which ultimately reduces costs and resource use for insurance firms.
In addition to improved customer experience, AI also has the potential to reduce fraudulent claims. AI works to stop insurance fraud by analyzing data that can spot and then flag unusual patterns of behavior, which ultimately saves insurance companies money and resources.
As tech continues to revolutionize an array of industries, it’s no surprise InsurTech is one of them. Blockchain, the Internet of Things, artificial intelligence and machine learning have driven the industry in a new direction and encouraged a more transparent and efficient relationship between consumer and insurer. Our eyes are peeled for further improvements and new technology that will continue to take the industry by storm.