Over the next decade, tech advances will result in an insurance landscape that looks drastically different from the one we know today. Are you ready?
You wouldn’t expect insurance to be a hot topic when it comes to a discussion of disruptive products and services. However, new technology in insurance coupled with consumers’ expectations for a more direct, more personalized experience is creating opportunities for both legacy insurers and new comers to reshape the industry from top to bottom.
A future built around innovation in insurance sounds like something from a movie set in a galaxy far, far away. Just picture it…a typical worker, Sally, straps on a wearable device that will monitor her physical activity in real-time throughout the day. The fitness tracker allows Sally’s health insurer to dynamically adjust pricing and provide incentives based on her health behaviors over time.
Then Sally uses her digital personal assistant to arrange for a self-driving car for the day. If Sally decides she’d rather be in control while in the driver’s seat, her auto insurer is alerted and immediately suggests a route with a lower risk of accidents. It also automatically alerts her of an increase in her rate, because she chose the “riskier” option of driving herself.
Sally leaves her sensor-filled home every day without worrying that she’ll return to a catastrophic event like a flooded basement – and the accompanying headache of filing a claim and making repairs. An IoT device continuously monitors water levels and automatically shuts off water to the house, preventing the inconvenience and cost of damage from a leak.
All the technologies that make the above scenario possible, exist right now. Many of them will be used to transform the typical insurance reactive state of “detect and repair” to a proactive one of “predict and prevent” in the near future. According to a recent survey by Accenture, 66% of insurance leaders say that their organizations are experiencing digital transformation at an accelerated pace. Over the next ten years, new technology ideas for insurance will rapidly and radically change what traditional insurers can offer their customers and how they deliver their innovations. However, there are innovative tech companies focusing specifically on how to take the best that technology has to offer and combine it with the data you already possess today to create the culture of “predict and protect” today.
Here’s an overview of some of the top tech-driven trends making the biggest impact on insurance now and into the years to come:
Like Sally, we already interact with AI-related technologies in our offices, homes, vehicles and on our bodies. Even though the AI-enabled digital transformation was on the horizon, the urgent need for organizations to adopt AI was largely brought about by the global pandemic. Businesses were forced to facilitate remote workers, support distribution capabilities and improve their online functionality.
Several of the emerging trends being incorporated into technology in insurance are related to and/or enabled by artificial intelligence.
Equipment sensors in industrial settings have been around for a while but in the next few years, there will be a marked increase in connected consumer devices. Think about how common it already is for your car, smartphone, smartwatch, home assistant and fitness tracker to “talk” to each other. The number of these types of connected devices will multiply and be added to with new products like medical equipment, home appliances, eyewear, clothing and even shoes. Experts predict that by 2025 there will be up to one trillion smart devices out there gathering loads of data.
The Internet of Things (IoT) makes it possible to improve the quantity and quality of data. Specific data can be collected with increased frequency enabling consumers to provide a more realistic view of their needs while insurers get a more accurate analysis of risk.
All this real-time connectivity and rich data mean insurers can have a deep understanding of their customers, allowing them to offer new products that are more personalized and relevant.
It’s hard to deny how robotic process automation (RPA) has changed the way we interact with the world. The most common way automation has helped insurers so far has been to streamline their back-office operations – a welcome improvement, but not exactly revolutionary.
In the field of manufacturing, 3-D printing has the potential to significantly alter future manufacturing and commercial insurance products. And claims can be greatly reduced or even prevented through predictive maintenance when IoT is used for monitoring equipment in real-time.
The next three years should bring an increase in the use of programmable drones, self-operating farm machinery and surgical robots. By the year 2030, there will be a noticeable difference in the number of self-driving cars on the road. All these advancements powered by AI will mean insurers will need to adjust risk pools, meet changing customer expectations and create new products. Something that is already happening today for more tech-forward industries like asset sharing marketplaces, vacation rentals, and even shipping.
The value of data is exponentially increased when it can be shared and used across related industries. Around the globe, many insurers are missing out on the benefit of shared data because they’re tied down by having on-site legacy technologies.
More modern offerings, like embedded insurance companies, shifting from legacy technology to the cloud. Using the cloud makes these insurers more agile and provides them with the incredible computing power needed to extract and analyze the volumes of data made available through sharing.
Additionally, both public and private organizations will create ecosystems for sharing data under a common framework. For example, it makes sense for data retrieved from a wearable device to be shared directly with a health insurer who can then use the information for risk-based pricing.
Currently, deep learning technologies such as convolutional neural networks and other sub-categories of machine learning are mostly used for voice, image and text processing but very soon will be expanded for use in a broad range of applications. Designed to mimic a human’s ability to learn, cognitive technologies will be employed to process the massive complex data streams coming from the insurance products that are connected in real-time to a person’s activities and behaviors.
As the commercial use of cognitive technologies grows, insurers will be able to develop new product categories and innovative ways to engage their customers based on the way those customers learn and adapt – and at the same time, respond to any risks that may become apparent in real-time.
The use of applied AI in the insurance sector is still in its infancy, but as it grows it will transform all core processes of the industry: distribution channels, underwriting practices, claims management and service delivery. Productivity will increase along with the quality of customer interactions.
Insurers are responsible for handling sensitive information regarding their customers. In the future, as insurers innovate with new products and services, customers will need to divulge even more information of a sensitive nature. New technologies in insurance will make it possible for insurers to use all this rich consumer data to manage risk more effectively, moving into the “predict and prevent” state mentioned earlier.
Also, the expected increase in the use of blockchain will aid insurers in keeping customer data safe and decrease the complexity of verifying customer identity. Preventing cyber attacks is a must and insurers will rely on zero-trust security and other approaches to strengthen their networks.
Not long ago if you wanted to create an app or website, you had to hire a programmer with a sophisticated knowledge of coding to build it for you. The democratization of technology has rapidly changed how much non-IT types can do on their own.
For both consumers and businesses, advanced technology is more accessible. User-friendly products that use natural language processing, no-code or low-code solutions and robotic process automation are just a few of the innovations that make the power of technology available to everyone.
A strategic combination of these technologies in insurance over the next decade will result in an insurance landscape that looks drastically different from the one we know today. An interesting observation is that legacy insurers don’t really have an advantage in the insurance world of the future. Although they have deep insurance knowledge, they are often slow to tap into technology and innovate with new products and distribution channels.
The winners will be any entity, new entrants such as eCommerce or sharing economy tech platforms, that have the foresight to leverage innovative technology in insurance to develop new products, make use of insights from a mass of data, optimize processes to lower costs and delight and engage users by offering them personalized, meaningful products - presented as part of the core offering of their business.
Tint empowers tech platforms that want to offer their end-users protection products an easier way to do so. Through a simple API and no-code app, Tint provides the infrastructure to get embedded insurance programs up and running quickly without sacrificing compliance or flexibility. You can own your program (and the profits), keep control of the relationships you have with your users, and grow your business without the need for ongoing engineering resources.
If you have questions about any of the technology in insurance innovations discussed in this article or how Tint can help you create your own unique embedded insurance program, we’re always ready to connect. Let’s talk!
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