It is believed that the insurance market is not as technologically advanced as, for example, the banking market. You don’t hear about revolutionary changes in insurance or technological breakthroughs. It seems that insurers follow other people’s innovations and pick them up with a long delay, after other markets.
But, of course, not everything is so sad. In fact, the insurance market is on the verge of a technological revolution. At the moment, there are three main blocks of technological innovations in insurance. These trends may change the insurance market landscape, business models, and technology platform.
Trend 1. Remote Communication With Clients, Insureds, and Objects Of Insurance
Telematics is by far the most well-known field in this area. With the help of special equipment installed in the customer’s car, the insurance company can track the driving style. Thus – to determine the level of risk. At the same time, careful drivers can receive significant discounts from insurance companies. Now the spread of telematics in car insurance is only gaining momentum around the world.
Telematics will be used in all types of insurance, and most importantly, it will even change the way we live.
The telematics technologies are spreading from motor insurance to other types (property and cargo insurance, etc.). Telematics can protect Smart homes from robbery and various unforeseen situations. In transportation, the path of the cargo is tracked using telematics.
Health telematics — an ecosystem of wearable devices, various trackers. Such software for insurance companies allows you to track health indicators and lifestyle. These parameters include heart rate, number of steps, physical activity, blood sugar content, and much more. Insurance products based on health monitoring will be profitable for customers and insurers. Also, they will allow people to control their health, lead a proper lifestyle. We can say that the spread of this technology will go beyond the boundaries of insurance and will become a new vector of people’s social life.
Trend 2. Big Data, Business Intelligence, and Smart Solutions Based on It
Big data and business intelligence tools can analyze different factors affecting risks, losses. The use of these technologies reduces the cost and optimizes the daily business processes of insurers. Companies that automate risk analytics get more value from all sources of information and identify risks at an earlier stage.
Consumers will also benefit greatly from this. Focusing on hundreds of customer behavioral factors, insurers can calculate individual rates. As a result, a client with a positive insurance history and low risks will get a much lower rate.
Besides, thanks to the spread of Big Data, on-demand insurance is actively developing. These are programs that allow you to include insurance as an application in your smartphone when you need it. For example, during a trip or home insurance at the time of departure.
By focusing on behavioral factors of specific customers, insurers can calculate customized rates. As a result, a client with a positive insurance history and low risks will get a much lower rate.
Trend 3. Digitalization of All business processes and the insurance stage itself. From the purchase to the settlement of the insured event
Blockchain has proven to be very effective here. Solutions based on it allow you to check the personal data of the insured and reconcile the parameters of actions on insurance objects. This approach can be applied to both policy issuance and claims handling. That is, they work to reduce the loss rate from fraud.
Blockchain-based mutual insurance companies are increasingly appearing in the world. This is a new round of interest in mutual insurance systems – an analog of P2P lending. But it is used for risk management and payments for insurance events. The idea itself, of course, is not new, but it is the blockchain that opens up great prospects for this model.
The global insurance market is estimated at five trillion dollars. The market for innovative technology in insurance is only gaining momentum. Investments in insurtech amount to about three billion dollars a year and this figure will grow. Every year about 500 insurtech start-ups are launched in different countries. Digitalization of insurance is a new level of insurance products and client service. It reduces costs, calculates risks, and increases customer loyalty. It also allows you to set up insurance policies.
Startups offer platforms for customer identification, the use of drones for remote monitoring, the settlement of insurance events. New companies are introducing telemedicine and telematics, neural networks, and self-learning artificial intelligence. The latter can sell insurance products, conduct actuarial calculations, and catch fraudsters. So we can be sure that very shortly insurance will change as much as it has not changed in the last twenty years.