Two AI Insurance Trends Tech CEOs Should Know About

Two AI Insurance Trends Tech CEOs Should Know About

Pricing and personalization are the two key trends that can make or break your insurance or protection program. Are you prepared?

Larger legacy insurers are beginning to take notice of how artificial intelligence (AI) insurance technologies can transform almost every aspect of their operations. In fact, a whopping 74% of insurers plan to invest more in this innovative technology in 2022. They’ve seen the proof that AI makes it possible for them to serve customers faster with less expensive yet more secure products.

 

Naturally, it’s for their own bottom line that these industry behemoths will tap into various subsets of AI–machine learning, deep learning, neural networks and natural language processing. They’ll leverage AI and the massive amounts of related data to automate application and claims processing, detect fraud, estimate repair costs, determine optimal pricing and “personalize” their products and service models.

 

It’s these last two areas–pricing and personalization–that tech CEOs should pay particular attention to. Even if you’re not in the insurance business per se, is it possible to apply AI insurance technology for your own benefit? The answer is, absolutely yes.

 

You may already offer your end-users some type of embedded insurance (insurance, guarantees, warranties or opt-in protection plans) through a third party. Or maybe you’re just starting to look at insurance as a way to bolster user confidence in your platform and bring in more revenue. Either way, you could set out on your own and follow the lead of top insurance executives. But the path will be more direct and far less bumpy if you find the right partner to guide your AI insurance journey from start to finish.

 

In this article, we’ll show you how an AI-powered embedded insurance platform, like Tint, can take the same kind of information the legacy insurers are leveraging and use it to your advantage. Based on the data you already have, you can gain a better understanding of your customers’ behaviors and preferences which makes it possible for you to:

 

  1. Price embedded protection products more fairly
  2. Personalize your protection offerings

 

Before diving into how AI applies to each of these two use cases, here’s a simple definition of AI: Computerized tools that are designed to perform tasks that normally require human thinking such as learning, decision-making, recognizing patterns and predicting.

 

It’s a complex and evolving technology, and when applied to data sets has the power to unlock new opportunities for growing tech platforms.

 

Tint Uses AI Insurance Technology to Put a Fair Price on Your Risk

 

It’s been said that insurance, at its core, is the art of putting a price tag on risk. In the past, insurers had to base their pricing on the only data they had available – statistical data drawn from fairly broad categories of customers who shared relevant characteristics.

 

Let’s look at an example we’re all familiar with: car insurance. Typically, a customer’s premium was based on the risk associated with other people of the same age, gender, location, car model, mileage, previous penalties, etc. That scenario is rapidly changing with the use of AI and the Internet of Things (IoT). 

 

With AI technologies, more specific data is gathered and then can be used to determine the risk of an individual driver. Through the use of sensors, insurers can know with a high degree of certainty how a person drives, including details like speed, instances of hard braking, cell phone usage and types of routes usually taken. All these habits factor into a person’s risk assessment which directly affects the premium they’ll have to pay. 

 

Using the same applied technology, tech platforms can price protection products for their users in a way that provides affordable coverage for the user – and allows the platform to still make a profit. Keep in mind that according to a study by McKinsey, “the most profitable insurance companies use technology-enabled underwriting processes to effectively set premiums.” The encouraging news is that what works for insurance companies can work for e-commerce platforms, peer-to-peer marketplaces, online shipping platforms and asset-sharing sites as well.

 

Regardless of the type of tech platform you run, Tint can assist you in this risk-based pricing process by using the historical data from your transactions, along with external data from third-party resources to build a risk score. The risk score can then be used as one factor in more complex pricing models. The result is fair pricing for each individual user on your platform. For a more in-depth explanation of how our Tint Score worked for one of our customers, read this success story

 

So let’s say your core offering is an asset-sharing marketplace. (These types of platforms are well suited for offering on-demand insurance.) You understand the benefit – even the necessity in some cases – of providing protection for your users. After all, if you don’t offer coverage, they’re likely to shop elsewhere and then you risk that they won’t return to your site.

 

With Tint’s AI insurance technology, you can assess risk in real-time. You can accurately evaluate each user’s risk profile to come up with the optimal price. Less risky users enjoy a cheaper price. Riskier ones pay more – which, for some, is still a deal. You’ll be able to configure the profiles you are comfortable with and price accordingly - even if that means that you choose not to offer your embedded program for the riskiest transactions. 

 

Key Takeaway: AI insurance technology allows tech platforms to expand their market with protection products that are priced to provide both affordability for the user and profitability for the platform.

 

Tailor Your Protection Products with The Help of AI Insurance and Tint

 

AI insurance technology improves your risk assessment process so you can provide protection for each of your users at a fair price. While this benefit of individualized pricing certainly creates a more personal experience for your user, it’s not the only way that you can increase the “personalization” factor on your platform.

 

Tint’s artificial intelligence algorithms are trained to use behavioral and transaction data to create a more highly defined buyer profile which then allows you to recommend personalized products to each one of your users in real-time at the point of sale. For example, if your platform connects pets with dog walkers or pet care providers, think how personal it would feel to your user if you also provide an opportunity for them to purchase a pet wellness plan right then and there. 

 

Offering your users' protection products that are tailored to their needs, behaviors and expectations has a boomerang effect. You're delivering something of value to them, but getting much in return: 

 

  • Personalized embedded insurance products nurture brand loyalty in your users and promote a higher lifetime value. (According to a survey by Accenture, 80% of insurance customers expect and want more personalized treatment.)

 

  • Personalization can set you apart from your competitors. As users compare protection products across platforms, the fact that yours is more in tune with what they want and need can be an important differentiator.

 

  • Personalized protection products can increase revenue. Companies that integrate advanced technologies to create more customized experiences are seeing a 6-10% revenue increase.

 

You know your users better than anyone else, but once you introduce AI insurance technology to the picture, you’ll really know them. You’ll be able to offer your users protection products that are individually tailored to their interests and provide them with a seamless purchasing experience – just one more way to personalize your platform.

 

Key Takeaway: AI technology allows you to create a more personalized customer experience which results in higher LTV, product differentiation and the potential for more revenue. 

 

Tint: Partner with a Trendsetter

 

After you’ve decided that you’d like to grow your platform through an intrinsic embedded insurance program, here’s a checklist of things to consider:

 

  • Do I want to control my program, my relationship with users and the profits?
  • How much risk am I able to take on comfortably?
  • How much do I know about insurance and compliance issues?
  • Can I afford to have my engineering resources shift focus to build the front- and back-end infrastructure to support an insurance or protection program?
  • When do I hope to have a program up and running?

 

Developing an embedded insurance program on your own is a huge undertaking. You need to understand the complexities of insurance (or hire an expert) which is a highly regulated industry. No matter how skilled your engineers are, creating software that leverages AI insurance technology could take them years – and pull their focus from your core platform. You’ll also find it challenging to run a program as a profit center unless you’re experienced with determining how much risk to retain.

 

With Tint, you’ll be able to design and manage a program customized for you and your users in a matter of months. You bring your unique data and insights and we’ll step in with our insurance expertise to make sure you’re in compliance. 

You likely already have an idea for how to better protect your users, let us use our AI insurance models, infrastructure, and compliance expertise to help you make it a reality. Let’s talk.

‍This website is made available to you for informational purposes only. It does not provide specific legal advice and is not a substitute for competent legal advice from a licensed attorney. The material on this website may not be used by any person or entity without the express written consent of Tint.

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