What is Insurtech?
The companies that are focused on innovating and are interested in reaping the benefits of the latest insurance software solutions, development services are carried out to reduce the costs both for themselves and for their customers. They strive continuously to improve operational efficiency and enhance the customer experience.
Inurtech is short for insurance technology which is a combination of forex solutions, banking, consumer finance, insurance claims, and services. It is still developing thanks to the rapid digitization of organizations worldwide and emerging technologies like AI, Big data, ML, and IoT are boosting it.
Technological Trends In Insurance Industry
To understand and predict customer behavior, the insurers have to gather a variety of data. That is where predictive analytics can come in handy. Moreover, you can utilize it to improve the accuracy of the data and for the following:
- Pricing and risk selection
- Identifying customers at risk of cancellation
- Identifying risk of fraud
- Triaging claims
- Identifying outlier claims
- Anticipating trends
Many property and casualty insurers have increased revenues and accuracy with the help of predictive modeling tactics. Valen Analytics found in their study that in comparison to the companies that don’t use analytics and predictive modeling, the companies that use them have been able to improve their loss ratios from 3% to 9%. The same study also found that the insurers that are using predictive analytics, have grown their direct written premiums by a significant rate, i.e. 53% when at the same time, the market average at the same period was around 18%.
Artificial intelligence technology is rapidly growing and widely accepted for both business and household purposes. The recent pandemic of covid-19 which caused the insurance companies to shift to digital has only boosted the implementation of AI. So, the companies that haven’t yet invested in AI will place their faith in this emerging technology in the upcoming months.
Emerging technologies like AI and ML have also boosted many other technology trends like physical robotics and 3D printing. And McKinsey states that –
“By 2025, 3D printed buildings will be commonplace and carriers will need to evaluate how this development changes risk assessments (…). By 2030, a much higher proportion of standard vehicles will have autonomous features, such as self-driving capabilities. Carriers will need to understand how the increasing presence of robotics in everyday life and across industries will change risk pools.”
So it looks like 3D printing will further disrupt manufacturing and commercial insurance in the future.
The need for no-code/low-code development
When it comes to software applications for the insurance business, many fintech software development companies prefer to use a low-code or no-code software application development approach. Such tools and software enable them to disburden some compliance and security tasks to third-party providers without compromising the compliance and security standards. And these tools are popular among the IT teams too as they help them resolve major issues.
No-code tools augment the overtaxed internal resources, reduce backlogs, and improve productivity. However, Jeff Wargin, chief product officer of P&C insurance platform Duck Creek, stated that no-code and low-code platforms do not only benefit the It specialists. He further says that –
“Low-code configuration tools allow business stakeholders – not just IT professionals – to update and manage apps and software using intuitive, user-friendly drag and drop functionality,” he wrote in a separate blog. “With moderate or even elementary app and software experience, insurers will be able to quickly implement new and different user interface (UI) features that customers demand, in a fraction of the time usually required.”
Furthermore, Jeff Wargin listed the topmost advantages of using low-code development for the insurance business. They are as mentioned below:
- Drastically increased speed to market
- Widespread app development across the organization
- The ability to build foundational features that can be expanded upon
- Empowering employees to take control of their work and offering
Internet of Things (IoT)
If it results in saving some money on their insurance policies, the customers are willing to share some more personal information. IoT here is what automates the entire data sharing process. The insurers can access the data using IoT devices like various components of smart homes, automobile sensors, and wearable technologies to predict the rates, mitigate the risk, and prevent losses.
IoT is surely one of the top technology trends in the field of insurance because it is forecasted that the global IoT insurance market value might reach up to 42.76 billion dollars by the year 2022. First-hand data, improvement in accuracy by risk assessment, empowering insured people by directly impacting the price of the policy. And as we already discussed before, it helps the insurers to enhance their accuracy and boost their revenues.
Another technology trend that has gained worldwide popularity in a very short time is cloud computing. And in the insurance industry, this technology can help insurance companies to handle their expenses very smoothly. By implementing cloud computing, many companies end up saving a significant amount of money which they can later invest into more important aspects of their business.
And when you implement cloud, it ensures versatility and performance. It also promotes enhanced business processes. Apart from that, the cloud computing technology trend is not like other traditional It services, it requires very little execution time. And in that very short span, cloud computing allows companies to optimize their outstanding services and functionality.
In the shared digital world, cloud computing has adequate tools to serve its large number of users effectively. The resources here at the disposal of cloud computing are both efficient and scalable. The powerful features and flexibility of the cloud-based apps help insurance agencies to reduce their overhead costs and streamline their business operations. This frees up some space from the budget and it also enables the insurers to ensure that their workers are focused on important things.
When people get insured, they share personal and highly sensitive information with the insurers and that’s why the insurance carriers are at the highest risk of becoming the victim of cyberattacks. And as the insurance industry runs on the core value of trust, the stakes here are very high. As the companies keep updating their systems with the constantly shifting technology trends, they have to migrate to a whole new platform that needs business-unit wide learning too.
That’s how it becomes an easy target to potential threats. Even if the hackers carry out a short-term attack, they have got enough time to compromise a single system which negatively affects the brand reputations and the rate of customer decline grows rapidly. Even if you take enough preventive measures for data security by installing Intrusion Detection Systems and Intrusion Prevention Systems, keep one thing in mind that hackers also evolve with time and technology. They too hone their skills at a regular interval.
If you want to stay a step ahead of them you have to take some pre-emptive measures like periodic security audits, contingency plans to mitigate risk, and security upskilling. These are of utmost necessity. It is the job of the CIO to allocate adequate resources to keep data secure, impede breaches, and maintain a strong accountability system for robust security. However, the promise of data security is one of the understated advice with far-reaching repercussions to attract new customers.
The rise of cyberattacks in the insurance industry made the implementation of blockchain technology very essential and imminent. Shakeel says that –
“Blockchain technology is a natural candidate for deployment in the insurance industry because it is premised on fraud detection and risk prevention,” he writes. “Issuing insurance policies with smart contracts and encrypted medical records makes operations safer and more efficient, apart from providing transparency between insurers and reinsurers.” He further states that – “When large companies adopt blockchain in their mainstream businesses, it is imperative that SMEs follow technology trends in the insurance industry.”
Many top insurance companies are involved in creating blockchain applications through an initiative known as the Blockchain Insurance Industry Initiative (B3i).
The insurance premiums are expected to rise in the upcoming years, especially for car insurance. Meanwhile, the insurance players are looking for potential tools and technologies that could help them minimize their expenses. And one technology that has been proved to be the most effective so far in reducing insurance premiums is telematics.
In the case of car insurance, a black box is installed in the cars to gather telematics data. In the exchange for a customized insurance premium, the black box records the driver’s behavior like how often does he/she brake or how much he/she accelerates, and more. The insurance companies also keep track of the internal actions of the driver as well as the location of the car and at what speed it is traveling through a GPS installed with onboard diagnostics.
All this data collected from the car and the driver’s behavior helps the insurers to decide the car insurance premiums. It is also known as usage-based insurance (UBI), or pay-as-you-drive insurance. The essence of the whole matter is “reward the safe drivers”.
Social networks and data mining
In the case of both professionally and personally, social media platforms have now become an integral part of our lives. It is one of the best platforms with an attractive environment for companies to interact with their customers. It is the best place where your professionals can get creative and that too inexpensively. Social media platforms are the best to engage with your potential customers.
Apart from the whole marketing perspective on social media, it is also used for data mining. The data gathered from such platforms are considered to be very helpful in improving risk assessment and fraud detection for insurance companies. Social media provides a new perspective to the insurance firms enabling them to deliver enhanced customer experience.
A study suggests that by the year 2025, 95% of all customer interactions will be powered by chatbots. With the help of advanced technology trends like AI and ML, chatbots can learn to interact with customers seamlessly. On the plus side, it would save a lot of time for your employees which can be used to focus on core aspects of the business instead.
In case you are having any doubts, let me be very clear that chatbots are perfectly capable of walking a customer through the policy applications and claim processes. This allows for human intervention for more complicated cases only.
Geico has developed a virtual assistant named Kate that interacts with the customers through text messages or voice to help them resolve policy-related questions, coverage inquiries, and more. It is available to serve the customers 24/7. Seeing the extraordinary results from such initiatives, more and more insurance agencies are interested to invest in such technology trends and believe me when I say that the expectations from chatbots to interact and perform well are just going to increase in the upcoming years.
Customers crave value from whatever products or services they are utilizing. That’s why insurance companies need to execute value innovation if they want to stand out from the crowd. Otherwise, they will be seen as just another commodity provider whose only differentiating factor from other competitors is their price. So, if we believe that the insurance industry has the hidden potential of adapting to the latest technologies then they are pacing towards the path of technology modernization.
From artificial intelligence to telematics and blockchain, whatever innovations are happening in the market in recent times, it is going to be an interesting year to see the development taking place in insurance technology. And in that change, we believe that the technology trends that we discussed in this blog are going to be a positive force that will help the insurance companies to unlock their potential to boost their business growth.