The pandemic has accelerated the digital transformation of the insurance industry. Driven by industry trends, customer expectations, and regulatory pressures, digital innovation has resulted in the creation of a new space called InsurTech that is aimed at the seamless delivery of insurance products. Offering faster on-boarding and claim settlements, diversification, and data-driven price discovery, the use of cutting-edge technology is bringing about a greater level of inclusion, efficiency, and product innovation thus changing the insurance industry landscape.
Here are a few ways in which innovation and technology is shaping the future of insurance.
1. Transparent and easy to use platform
Insurtech players enable angle seamless journeys to help customers compare features & prices of insurance products and complete the buying journey in a very short amount of time. We are witnessing a growing trend of more and more customers wanting to fulfill insurance needs from their smartphones, tabs or laptops, without needing to step out of their homesThere are multiple reasons for the same:
- Pricing & availability: One of the biggest selling points of these platforms is that they offer the best prices and a complete range of products which is not possible in the offline world due to high commissions and limited products available with agents. Moreover, these platforms are available with the customer all the time, which allows the customer to complete the buying journey from anywhere and anytime.
- Transparent and no mis-selling: There is no scope of any mis-selling such as over promise, which is rampant in the offline world, due to the regulated nature of the industry and transparency brought about by the fact that these systems are online.
- Smooth buying experience: Due to availability of various data aggregator platforms such as eKYC, vahan database and aadhaar, it becomes really seamless to complete the buying journey as most of the data is already prefilled. This reduces chances of errors to a large extent
- Digital signatures: With changing customer expectations, where smooth experiences are a priority, insurtech providers will aim to offer remote processes to gain a competitive edge. One of the easiest ways to do this is the employment of digital signatures. Digital signatures, or e-signatures, are helping companies complete remote, domestic, and cross-border agreements at unprecedented rates. The traditional paper-based process is tedious and leads to a lot of time and resources being wasted. Digital signatures reduce costs, streamline processes, and increase revenues – all while providing a secure environment for the consumer.
2. Future of Insurtech
As we move forward, the insurtech industry would go deeper into customer journeys and embed itself into customer’s daily life. By using data by sensors which are close to the customer, insurance companies would be able to underwrite risk in much better manner which would enable personalized pricing & products, seamless buying journey and automated & instant claim settlement.
- Smart sensors & wearables: Ranging from apps to monitoring devices, to wearable technology – all form a part of the tracking tools for insurtech companies, which help consumers get personalized pricing, automated claims and fraud management for insurance companies. The confluence of varied technologies such as AI /ML, and Internet of Things (IoT), would result in the creation of one-stop-shop platforms that improve the efficiency of insurance providers by making transactions easier, giving insurers access to actionable data through connected systems, and providing a smooth payment platform. We believe that such devices would serve the double purpose of monitoring & alerting as well as easing and automating insurance journeys.
It is expected that the global end-user spending on wearable devices will amount to more than US$ 90 billion by the end of 2022. Data from such devices is critical to developing proactive and interactive health insurance policies that can be used to provide complementary coverage or improved rates. Wearables can also help insurers warn customers of possible dangers in real-time. For instance, continuous glucose monitors can proactively alert people with diabetes to get glucose levels in blood, is higher than the threshold as well as providing important lifestyle change feedback to the customer & doctors alike.
Smart sensors also have the potential to completely disrupt motor insurance pricing & claims. We have already seen the advent of pay per use motor insurance policies. Similarly, cheaper pricing for better driving behaviour can make our roads safer for everyone. Such devices can improve the drivers, pedestrian & vehicle safety by giving real time ride feedback and alerts. These devices can help logistics players to assist driver behaviour in a remote manner.
Industrial and SME insurance has umpteen number of smart sensor use cases. For instance, cyber insurance can be tailor made by having bots which run automated scans on the corporate network looking for vulnerabilities and deciding pricing basis the overall security posture. Claims can also be made painless and less manual by having security bots confirm intrusion by attackers. Apart from cyber intrusions, physical intrusion detection and asset safety can be greatly enhanced by having security AI cctv cameras which monitors, alerts and helps in insurance claims.
- Harnessing Artificial Intelligence: Fraud is a major pain point for insurance companies, and AI is a key element in the fight against fraudulent claims. Integrated insurtech platforms and apps enable companies to detect and eliminate fraud due to the presence of a decentralized digital depository. As per Deloitte, 74% of insurance executives plan to increase their investment in AI in 2022.
Apart from fraud, operations such as claims and appeals processing and personalized insurance pricing can be automated by AI models like document processing, chatbots, and machine learning, thus creating a better customer experience and improving decision-making. AI can be leveraged to create continual interaction with clients for greater loyalty and upselling. It also enables a larger amount of data analysis from multiple sources which improve the forecasting models and allows for sophisticated property and actuarial analyses.
Because document processing is a repetitive task that is prone to errors, document capture and natural language processing (NLP) driven technologies are ideal for handling large volumes of documents. This can help companies process documents rapidly, save time and costs, and check if claims fit regulations.
In addition, insurtech firms can achieve efficiency, scale, and market penetration by mining social media data into their operating models. Access to such data allows for employing predictive analytics to gather customer insights leading to improved underwriting decisions. It also is useful for the collection of customer information after a period of inactivity, providing intimation about upcoming maturities, and be used to identify emerging customer needs through interactive forums and blogs, leveraging the information to improve products and services
(The author is Mr. Piyush Ranjan, Chief Technology Officer at Coverfox Group and the views expressed in this article are his own)