The implementation of technology in the insurance industry has opened the door to new product options, service models, and enhanced customer service opportunities. These have come to fruition in applications allowing for the automation of data entry and claims processing, the introduction of wearable technologies, and the use of artificial intelligence to detect compliance risks. These tools are transforming the insurance industry by offering new efficiencies and opportunities for companies and customers alike. According to Digital Transformation in Insurance, half of the survey participants are now working on insurtech applications or experimenting with them in their business. The high level of adoption reveals the depth of opportunity that integrating technology offers to industry companies. As 2020 unfolds, it’s important to understand the latest insurtech trends and how companies can leverage them. To help clients, prospects, and others, JLK Rosenberger has provided a summary of key trends below.
Key Insurtech Trends in 2020
- Intellectual Capital – Insurance companies that have invested in insurtech also need to make a corresponding investment in obtaining the intellectual capital to maintain, refine, and innovate existing solutions. One challenge is the cost of recruiting technically proficient talent to their ranks. This is exacerbated by the reality that many younger professionals lack interest in insurance, preferring to work in the technology industry. Insurance companies need to look for creative solutions to solve this problem, including joint ventures, partnerships, and other alternative structures to attract talent.
- Data & Personalization – The ability to offer customers insurance products that provide new value will give insurance companies a competitive advantage. However, one problem is that companies often don’t have the data to support the market demand for new products (such as usage-based policies). By leveraging wearable devices, companies will be able to understand behavior better and identify areas of opportunity. The personalization of data will allow companies to not only offer new products but is also expected to increase customer satisfaction.
- Artificial Intelligence (AI) – As with all industries, AI has the potential to impact almost every aspect of operations, offering both automation options and efficiencies to various processes. Consider how fraud prevention, underwriting, and pricing can be affected by AI. For example, using virtual claims adjusters will allow companies to settle and pay claims faster while reducing the incidents of claims fraud. AI also opens the door to enhanced customer experience through “intelligent” chatbots offering solutions based on social media data.
- Blockchain – This technology allows any company to maintain a cryptographically secured form of shared recordkeeping. While still in the early stages of adoption, insurance companies will benefit from enhanced ability to detect fraud, manage risk prevention, and real-time data collection to speed up claim times. In other words, as the industry makes strides to adopt blockchain, there will be a growing need to adopt standards and processes to allow companies to work with each other.
- Predictive Analytics – Leveraging existing data to identify trends and patterns is central to this type of analytics. Insurance companies may implement applications that conduct complex analysis identifying pricing and risk selection, fraud risks, customers with cancellation risks, and outlier claims.
- Social Media Data – Insurance companies are using social media for more than just marketing and advertisement. In fact, many are mining the data to improve risk assessment, fraud detection, and for customer experience. There are now applications available that require customers to login using their Facebook account. Through this, they are able to file claims, receive quotes, and access to other services.
It’s clear the industry is changing due to the opportunities afforded by insurtech. While larger insurance companies are leading the way, it doesn’t mean smaller companies will not benefit. There are several applications already available that achieve many of the benefits discussed.