Insurtech Continues to Challenge Traditional Systems with Forward Thinking Innovation
As one of the world’s oldest financial businesses, the function of the insurance industry has always been one that is dependent on insurers grouping together of policy seekers into certain risk categories. The broader the grouping, the less detailed are the risk categories, which leads to many people overpaying due to the generalized and unreliable data used to categorize them. As we transition into a digital world where people are constantly connected and supplying personal information about themselves via social media, smart wearables and so on, technology companies are finding ways to gather more specific data about individuals, leading to more specified risk categorization for the purposes of insurance. This is insurance technology, and it’s effecting every sector, from health insurance to life insurance to auto insurance and more.
What are some of the trends driving Insurance Technology in 2019? Not surprisingly, Artificial Intelligence (AI) and Machine Learning are major driving forces offering insurers the ability to create unique experiences and meet the high-speed demands of modern consumers. AI also enables insurers quicker access to data, and by cutting out the human element can lead to much faster and much more accurate reporting. Artificial intelligence is becoming more autonomous and sophisticated, evolving from robotic process automation in the back-office to serving customers on the front-line. Four out of five insurance executives believe within the next two years, AI will work next to humans in their organizations, as a co-worker, collaborator and trusted advisor.
Since its conception, social media has played a role in the insurance industry – but it is now developing beyond the uses of marketing and advertising. Social media mining improves risk for insurers by providing fraud detection capabilities and enabling brand new customer experiences. Digital insurance companies are now interacting with customers entirely via social media. Customers can log in, get quotes, file claims and request services all via a Facebook app. Insurance technology also uses social media to investigate fraud. Insurers can look for discrepancies between the social activity of individuals when compared their claims.
In China, where advanced technological development is at the forefront of every industry, insurance technology is no different. Shanghai, one of the most importance cities in China’s One Belt One Road initiative, is home to the Shanghai Insurance Exchange. As early as 2017, the SHIE was cooperating with as many as nine insurers to conduct a blockchain trial to learn more about these technologies in relation to insurance. Organizations that utilize blockchain also work with several other technologies, such as big data and artificial intelligence, in order to maximize the benefit for businesses.
Although many of these innovations are much needed and long overdue, there are reasons why some insurance companies hesitate to adapt. As such an old and traditional form of business, many insurance companies have continued to thrive for so long because of their extreme caution and reluctance to change. Being a highly regulated industry with various layers of jurisdictional legal hassles to deal with, many of the major players continue to survive by exercising extreme care. This caution has at times lead them away from working with technology startups, let alone startups in their own, very stable industry. But now many insurers are forced to deal with the reality that taking some risk – for example, partnering with an insurtech startup using blockchain technology – can and will ultimately modernize their performance and maintain their relevance in the shifting industry.
Over 80 percent of executives of major insurance companies understand that innovating at a rapid pace is necessary to maintaining a competitive industry lead. Sectors such as Captive Insurance, Catastrophe Insurance and Credit Insurance are all embracing emerging technologies like blockchain, virtual reality, and intelligent automation, which continue to entrench themselves into people’s everyday lives.