Although insurtechs are recognized as a disruptive force in a long-established industry, less is known about the actual technologies these companies use to differentiate themselves from traditional competitors. The application of emerging technologies such as artificial intelligence, machine learning, analytics, wearable devices, etc., has enabled insurtechs to be years ahead of traditional insurers in many respects, including the ability to deliver automated digital solutions to end users, more accurate pricing and underwriting, and even helping to create healthier people and safer workplaces.
As new technologies are used, insurtechs will continue to innovate and create efficiencies within the industry that have never existed before. While I’m excited about the many different technologies that insurtechs are working with or starting to experiment with, these are three key technology trends that I believe have incredible disruptive potential in 2022 and beyond.
1. Automation – AI and ML
AI and ML are already applied in the insurtech space. ML has laid the foundation for the industry’s ability to improve algorithms, while AI enables faster and more accurate pricing and underwriting. Use cases for AI and ML are expected to continue to grow—to research from Accenture shows that more than 75% of insurers plan to use AI to automate tasks in the next three years.
For example, by applying automation through AI to customer service, insurers are able to improve the overall customer experience for policyholders. Insurers can respond to common questions and requests faster and more accurately, as well as customize their service to the unique needs of their customers.
An example of successful automation detailed from an insurtech industry perspective report from Deloitte. Japanese insurance provider, Mitsui Sumitomo Insurance, used an AI-powered “agent support system” to identify customer needs through analysis of internal and external data. This led to 860,000 individual leads and 80,000 sales leads per month, with agent productivity increasing by 20-130%.
By continuing to automate new processes, insurtechs will be able to quickly and cost-effectively add new customers and improve customer retention. Over the next few years, automation will continue to grow and even become a mainstay for some of the traditional insurers.
The use of wearables has had a huge impact on insurance. For example, if construction workers wear accelerometers, insurers could detect how they move around construction sites and leverage the technology to create different risk scenarios.
Wearable devices also have the potential to play an important role in health insurance, as data collected on physical activity and health can inform underwriting and enable providers to develop affordable wellness initiatives that reduce costs. accidents and chronic disease incidents.
With permission from policyholders and the use of handheld devices and smartphones, life insurer John Hancock, announcement in 2018, it began integrating interactive policies to track fitness and health data. According to the company, policyholders have been shown to live 13 to 21 years longer and incur 30% less hospitalization costs.
There’s also an opportunity for wearable devices powered by augmented reality to have a similar impact – if construction workers wore helmets with built-in AR capabilities, it could improve workplace safety and awareness and empower policyholders to make more accurate risk assessments. Ultimately, wearable devices could lead to more accurate pricing and, importantly, a safer working environment.
3. Analytics and behavioral data
Improved data sources and analytics will allow companies to minimize risk and make informed decisions based on tracking behavior patterns. For example, these profiles have been used in the past by HR teams to make hiring decisions and help with risk assessment.
Behavioral analysis is also an increasingly useful tool in the fight against insurance fraud. How an insurance customer interacts with a provider’s online interface, whether using an old account or opening a new one, reveals information about the user and their intentions. This information is used to distinguish genuine customers from fraudulent activity.
Policyholders have expressed their desire for insurers to use behavioral data to improve the customer experience. According DataArt77% of policyholders surveyed said they would gladly trade behavioral data for lower premiums and faster claims.
The implementation of the aforementioned technologies will continue to propel the entire insurance industry forward and, in turn, will result in a more efficient experience for insurers and policyholders. While insurtechs are leading the charge in automation, wearables and behavioral data analytics, traditional insurers will also reap the benefits of innovation as customers can expect better prices, services and security. at all levels.