Insurance technology

Insurance technology

An industry around technology applied to insurance sometimes also referred to as Insurtech or Insuretech, whereby companies sell or distribute insurance or related products (such as data) digitally.

Insurance technology refers to the use of technology and related innovations in the insurance industry. These innovations are designed to increase savings and efficiency from the current insurance industry model. This often includes technology to prevent fraud and automate services. Other forms of technology applied to the insurance industry include:

  • Predictive analytics
  • Artificial Intelligence
  • Machine Learning
  • Internet-of-Things
  • Telematics
  • Social Media Data
  • Chatbots
  • Drones

Many of these technologies are focused on the carrier and client relationship, increasing engagement with customers. The increase of technology also allows insurance companies to better monitor insured assets and prevent claims. In turn, customers can install devices and systems to demonstrate lower risk and reduce claims costs.

Predictive analytics

Using predictive analytics, insurance technology companies can identify and meet current and future insurance requirements and trends, identify the risk of insurance cancellations, identify the risk factors associated with particular insurance packages, asses the risk of fraudulent claims, manage types of claims using pattern recognition, and prospect new customers through trend analysis.

Artificial Intelligence

In the insurance industry, artificial intelligence technology and systems are used for claims analysis, anti-fraud, and processing image and video claims and related information from customers. Artificial intelligence has been used to identify and assess the insurance risks for business and discover new sources of revenue.

Insurance companies are also using artificial intelligence for internal workflows, including digitizing paper records with optical character recognition to transition files to digital archives and storage in cloud archives. Similar technology can automatically review documents and reject them in the case of inconsistent information or errors, allowing staff to work with correctly filed claims. This use case is also known as Robotic Process Automation (RPA).

Machine Learning

Similar to artificial intelligence, machine learning technology has been used for the automation of claims processing using pre-programmed algorithms to improve processing speed and accuracy. And machine learning has been used for policy administration systems and risk assessment systems.

Machine learning systems have also been used for agricultural insurance, where the systems can assess satellite images to calculate damage and claims and areas where an insurance adjustor needs to be sent to a specific area for assessment. These systems have also been paired with mobile applications to allow clients to submit claims to an insurance provider, and for the provider to process the claim without calling an agent or paperwork.

Internet of Things

Insurance companies can use connected devices to offer consumers a way to share personal information with their provider and possibly save money on their insurance policies, including wearable technologies. Through connected devices, such as connected toothbrushes or wearable activity trackers, insurance companies are able to compile more data on individuals habits, including their activity, exercise, sleep habits, and eating habits in order to provide personalized policy plans and pricing.

The connected devices and sensors can be used to create digital ecosystems, such as "smart housing" which uses either cooperative business models with existing products (for example, a Google Nest or Amazon Alexa device) or they offer new digital add-on devices, such as home security systems. Other devices can be installed near potential accident or failure areas such as near water heaters and washing machines, or they can be installed in walls or roofing to report on structural integrity, and they can be installed along water lines to shut off in the case of a pipe burst.

Sensors

Similar to failure point devices, sensors can be installed for customers with flood insurance policies to provide property-based flood data and a risk-based pricing model. The pricing model is based on a plan based on the depth of flood insured against, and, in the case of flood, when the flood reaches the agreed upon level the insurance company can pay without requiring loss adjustment or claim processing.

Similar to these products, insurance companies are using connected devices and sensors to develop ambient assisted living for aging individuals and people with limited mobility. These technologies are generally proposed for allowing individuals to pursue an independent lifestyle without losing the possibility of emergency or nursing services. And insurance companies are beginning to use them to provide customers additional services, such as home emergency care, while also offering lowered premiums.

Similar sensors can be used in commercial applications, such as sensors in warehouses to assess risk to employees and risk of damage or theft. For example, they have been used to provide dat on plants and equipment and can monitor the equipment remotely and detect or prevent misuse and damage. Sensors have also been used to monitor commercial buildings which are not always fully occupied and where caretakers or staff are not around to monitor and react to any damages.

Sensors have also been applied for supply chain insurance, where the data gathered from sensors can better evaluate risk associated to goods moving through a supply chain and discover who is responsible when issues occur. These sensors are also used to understand the environmental conditions in both transit and storage and the affect on sensitive goods.

Telematics

Telematic devices are is a hardware offering from insurance companies that can be installed in the engine reader of a car. These devices measure and monitor various indicators such as speed, location, and accidents to determine a customer's policy premium. Telematics may encourage better driving habits through lowered claims costs.

Through telematics, insurance companies can offer usage-based insurance, pay-as-you-drive insurance, and pay-how-you-drive insurance. In the United Kingdom, O2 has launched a car insurance product which offers users a better price when they drive better. The company tracks the driver's habits, and in turn the driver can track their driving scores through a mobile application. O2 also offers users tips on improving their driving and mitigating risks.

Social Media Data

Social media has been used by insurance companies for marketing and advertising, but more often insurance technology is using social media for data to improve the assessment of risks and for the investigation of and detection of fraudulent claims. Social media offers insurance companies new ways to interact and support their customers, as well as adding a place where customers can receive quotes, file claims, and place other requests.

Monitoring social media data, and the ability of insurance companies to monitor and manage risk in real time, has the potential to reduce the occurrence of claims. Additionally, the use of data from telematics, connected devices, and social media has the potential to personalize products and services around individual needs and risk profiles.

Chatbots

Chatbots offer insurance companies automated customer communications. The artificial intelligence-enabled communications with customers can solve customer concerns as well as complete common processes like policy application, filing claims, and verifying customer data.

Drones

Drones offer insurance companies the chance to collect visual data and better calculate risk before issuing a policy. The data can include roof inspections, aiding in preventative maintenance and damage assessments.

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Further reading

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Digital Insurance: Technologies and Strategies Driving Insurance into the Connected Age | Reuters Events | Insurance

Insurance Nexus

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