Advanced insurance technology is already an integral part of the Property & Casualty industry, for both carriers and insureds. Getting insurance quotes can be as easy as clicking a button, managing coverage can typically be accomplished via a mobile app, and paper insurance cards are mostly a thing of the past.
Insurance technology is poised to mature even more in 2021. Digital insurance offerings and a defined omnichannel approach to customer service is driving the pace of change in the P&C insurance industry. What’s more, insurance companies of all shapes and sizes are searching for evergreen solutions — technology that can scale and update with changing demands and capabilities — to help them stay ahead of competitors.
While some of these tools are already employed by some carriers, we see them becoming more and more commonplace throughout the industry. Insurers looking for a competitive edge should consider embracing one or more of these 11 emerging insurance tech trends.
Download: new market survey report on trends shaping the new standard of insurance
Predictive Analytics
Predictive analyticsis used by many insurers to collect a variety of data to help them understand and predict customer behavior. However, there are new ways it can be utilized to improve accuracy of data.
In 2021,insurance companies can use predictive analyticsfor:
- Pricing and risk selection
- Identifying customers at risk of cancellation
- Identifying risk of fraud
- Triaging claims
- Identifying outlier claims
- Anticipating trends
Adopting predictive modeling tactics has also proved to increase revenues and accuracy for many P&C insurers. A 2018 study from Valen Analytics found that companies that used analytics and predictive modeling saw their loss ratios improve 3% – 9% more than companies that didn’t. They also reported that insurers using predictive analytics grew their direct written premiums by 53%, compared to the market average of 18% growth during the same time period.
Artificial Intelligence (AI)
The use of artificial intelligence (AI) has rapidly expanded, with AI-enabled devices becoming commonplace in homes around the world. A Deloitte Digital report stated that, as of 2017, more than 35.6 million people in the U.S. alone have voice-activated AI assistants, and the worldwide spend on these technologies was expected to reach $47 billion in 2020. So how can this prevalent and accessible technology be leveraged by the insurance industry?
Consumers are always looking for personalized experiences, especially when purchasing something as important as P&C insurance. AI offers insurers the ability tocreate these unique experiences, meeting the high-speed demands of modern consumers. The key is to use AI’s capabilities to leverage the massive amounts of consumer data available to create personalized experiences based on an individual’s behavior and habits.
Additionally, with AI insurers can improve claims turnaround cycles and fundamentally change the underwriting process. AI also enables insurers to access data faster, and cutting out the human element can lead to more accurate reporting in shorter periods of time.
A report from PwC forecast that AI’s initial impact will primarily relate to improving efficiencies and automating existing customer-facing underwriting and claims processes. Over time, its impact will be more profound; it can identify, assess, and underwrite emerging risks and identify new revenue sources.
Machine Learning
Insurance technology trends in 2021 will include the overlapping of various technologies, all in the name of improving accuracy. According toForbes, “Machine learning is technically a branch of AI, but it’s more specific… machine learning is based on the idea that we can build machines to process data and learn on their own, without our constant supervision.”
Machine learning can not only improve claims processing – it can automate it. When files are digital and accessible via the cloud, they can be analyzed using pre-programmed algorithms, improving processing speed and accuracy. This automated review can impact more than just claims: it can also be used for policy administration and risk assessment.
When it comes to adopting machine learning capabilities, you don’t want to get left in the dust. All signs point to machine learning becoming a common tool in the insurance space. An SMA survey found that 66% of P&C insurance executives believe that machine learning has a high impact potential for commercial lines of business, while 53% of executives believe it has a high impact potential for personal lines.
Internet of Things (IoT)
Most consumers are willing to share extra personal information if it means saving money on their insurance policies – and the Internet of Things (IoT) can automate much of that data sharing. Insurers can use data from IoT devices such as the various components of smart homes, automobile sensors, and wearable technologies to better determine rates, mitigate risk, and even prevent losses in the first place.
P&C insurers can’t afford to delay in leveraging IoT capabilities, as forecasts project a global IoT insurance market value of $42.76 billion by 2022. IoT will bolster other insurance technology with first-hand data, improving the accuracy of risk assessment, giving insureds more power to directly impact their policy pricing, and insurers the opportunity to improve accuracy and revenues.
Insurtech
Insurtech — or more specifically, insurtech companies — leverage the latest insurance technologies to reduce costs for both customers and insurers, improve operational efficiency, and improve the entire customer experience. While this may sound similar to digital insurance offerings that have been in use for years, insurtech takes those capabilities to the next level.
Insurtech investment reached approximately $4.9 billion in 2018, namely because “Insurtech is changing the way real-time and predictive data can be captured and used to promote development of insurance products that are responsive to emerging risk, allow for customized coverage and pricing solutions to respond to macro-risks such as climate change or cyber risk, and drive future resilience.”
Social Media Data
Social media and its role in the insurance industry is evolving beyond marketing strategies and clever advertisements. Mining social media data is improving risk assessment for P&C insurers, bolstering fraud detection capabilities, and enabling entirely new customer experiences.
Take the Dutch insurance companyKroodle, for example. Their process of interacting with customers is entirely accomplished via social media. Customers log in using their Facebook credentials, and they file claims, get quotes, and request other services via a Facebook app.
Insurance technology can also leverage social media to investigate fraud. Insurers can look at the social activity of insureds and compare it to claims records, looking for any discrepancies.A Morgan Stanley reportcited a tool utilized by carriers to investigate claims throughout the assessment process that examines the social relationships between parties involved – and monitors their activity on the day of the loss to look for red flags.
Telematics
Auto policies will continue to be impacted by telematics capabilities. In insurance technology, think of telematics as wearable technology for your car.Cars can now be equipped with monitoring devices — think Progressive’s Snapshot — that measure various indicators such as data on speed, location, accidents, and more, which is all monitored and processed with analytics software to help determine your policy premium.
The benefits of telematics are numerous for both insurers and insureds. Telematics in P&C insurance will:
- Encourage better driving habits
- Lower claims costs for insurers
- Change carrier to customer relationships from reactive to proactive
Chatbots
According to some estimates, by 202595% of all customer interactions will be powered by chatbots.
Utilizing AI and machine learning, chatbots can interact with customers seamlessly, saving everyone within an organization time – and ultimately saving insurance companies money. A bot can walk a customer through a policy application or claims process, reserving human intervention for more complex cases.
Geico’s “Kate”is a virtual assistant that communicates with customers via text or voice, aiding in policy questions and coverage inquiries, available 24/7. More insurance companies are investing intechnology like this, and chatbot capabilities are expected to increase in 2021.
Low Code
Insurers today need to be able to manage software platforms, deploy updates, and get to market with new products efficiently and accurately. While this process used to require a skilled developer or IT team, new advances in software-specific coding platforms have made this process easier than ever before.
Low-code configuration tools allow business stakeholders – not just IT professionals – to update and manage apps and software using an intuitive, user-friendly drag and drop functionality. With moderate or even elementary app and software experience, insurers will be able to quickly implement new and different user interface (UI) features that customers demand, in a fraction of the time usually required.
The biggest benefits of low-code development are:
- Drastically increased speed to market
- Widespread app development across organization
- The ability to build foundational features that can be expanded upon
- Empowering employees to take control of their work/offerings
A survey by Mendix, a development company, reported that 70% of low-code users learned how to develop apps in less than a month, and 72% of low-code users were developing their own apps in just three months. With that kind of speed and easy-to-use interfaces, app development can become an all-hands-on-deck initiative.
Drones
Insurers are taking to the sky, or at least their drones are. Unmanned drones are an insurance technology tool that will be utilized more by carriers in 2021. They can be used across many stages of the insurance lifecycle – collecting data to calculate risk before issuing a policy, aiding in preventative maintenance, and assessing damage following a loss.
Farmers Insuranceis a great example, as they deploy Kespry drones to aid risk and damage assessment on homes. These drones perform roof inspections and other assessments, and the drones transmit their data to the cloud for analysis. This is yet another instance of IoT and other technologies working together in the insurance industry.
P&C carriers are always searching for the latest and greatest developments in insurance technology. It helps them not only stay ahead of their competitors, but also deliver the experiences customers expect in the modern market. With all of the innovation going to market in recent years, from smart home technology to insurtechs and microservices, 2021 will be a very interesting year to watch for insurance technology developments. Stay tuned…
Keep up on our latest news!
Subscribe
FAQs
How technology is changing the insurance industry? ›
An insurer can provide more customized premium offerings to customers if in fact they have a holistic view of the pertinent data. Pricing strategies, claim fraud mitigation, lead generation, and customer satisfaction are a few of the areas where data analytics can provide competitive advantages.
How is technology used in insurance? ›The technology involves data mining tools and quantitive analysis. Data analytics can be applied to detect fraud. Predictive analytics is useful to improve the fraud detection process, helping prevent claims payouts. Analytics on claims and fraud transactions helps enhance risk management.
How technology will change the insurance industry by 2030? ›Insurance companies in 2030
In this context, it is foreseeable that, by 2030, insurance companies will have implemented sensors based on the internet of things throughout each ecosystem, such that they will be able to provide specific information on risk variables within the ecosystem.
...
6 biggest challenges for insurance companies
- Lack of trust. This is a reason why many individuals don`t bother with insurance. ...
- Competition. ...
- Mismanagement. ...
- Economic instability. ...
- Weak manpower. ...
- Excessive politicization of the insurance industry.
- Protection will remain a customer priority.
- Digital technologies.
- Investments in Data Science and Analytics will rise.
- Easing access to insurance.
- Strengthening of the insurance advisory approach.
As Artificial Intelligence Technology matures to deliver human-like interactions, it can fundamentally change the cost and efficiency basis for insurance companies. It can also simplify interaction with some of the complex insurance processes and technology that exists today.
What technologies do insurance companies use? ›Insurance agencies and companies use AI to improve underwriting and digitize claims cycles. Supporting AI with sensors and Internet of Things (IoT) devices enables insurers to monitor, prevent and mitigate risk more effectively.
Why is technology important in insurance? ›New technologies will allow carriers to more effectively manage risk and make use of complex customer data—a critical step in evolving to a “predict and prevent” model of insurance where data is shared more frequently between parties with insurers playing a more active role in claims prevention.
What is the impact of digital technology on insurance? ›Digital transformation in the insurance industry has led to efficiencies in its operations through Artificial Intelligence (AI), machine learning and predictive analysis. Claims can now be processed through the ease of a mobile app instantly and have helped insurers to reduce the time in “policy writing”.
Which technologies are creating disruption in the insurance industry? ›AI and machine learning are new technologies that are creating widespread disruption in almost all industries.
How is AI used in insurance? ›
Some of the emerging AI use cases for auto insurance include: Predictive cost analytics for claims: Leverage machine learning techniques and data science to estimate the average claims cost per different customer segments. Adjust premiums respectively and manage your cash flow better.
What are the biggest challenges facing insurance companies? ›- Becoming experts in data management and security (no change) ...
- Preparing for (and limiting) climate change (up 3 places) ...
- Shifting towards new pension and healthcare models to address an ageing population (no change)
Continued digitalization of legacy insurance processes and technologies with InsurTech. InsurTech is the next remarkable trend in the insurance sector in 2022. First off, what's InsurTech? In simple terms, InsurTech is the use of advanced technology to bring innovation to the insurance sector.
How can insurance services be improved? ›- Find your niche. Insurance agents often want to be all things to all people, but niche marketing may be the better strategy to increasing your insurance sales. ...
- Network in your community. ...
- Prospect every day. ...
- Partner with other professionals. ...
- Nurture your leads.
- Digital Documentation.
- Speed and Transparency.
- Process Automation.
- Insurance Analytics.
- Insurance Claims Investigations.
Information technology increases the speed and efficiency with which underwriters evaluate new applicants and analyze aspects of their lives affecting the carrier's proposed financial risk.
What are the 3 most important insurance? ›- Health insurance.
- Disability insurance.
- Critical illness coverage.
- Life insurance.
- Personal accident.
Artificial intelligence, machine learning and data science are technologies designed to ensure a clear improvement in claims management, mainly if implemented throughout the process, and if can help claim managers.
What software do most insurance companies use? ›- EZLynx. EZLynx is an insurance agency management software that streamlines all agency workflows. ...
- Applied Epic. ...
- WaterStreet. ...
- Bitrix24. ...
- Indio. ...
- Jenesis Software. ...
- PhoneBurner. ...
- NowCerts.
With AI, insurance companies can build platforms that process real-time data for prevention purposes and automate a big part of insurance executives' responsibilities, including data processing, fraud detection, and claim estimation.
Will insurance agents be replaced by technology? ›
At its core, selling insurance requires human touch – building relationships, paying attention, being empathetic, and caring about feelings, these qualities will never be replaced by AI.
How IoT is used in insurance? ›By offering IoT devices that monitor a connected home's security and safety, insurers can track even the smallest anomalies in a home. If any abnormality occurs, the IoT system will automatically alert the insurance company, allowing the insurer to step in to prevent damage from happening.
What are digital insurance products? ›The concept of “digital insurance” is an umbrella term that encompasses the vast amount of new technologies that have changed the way nearly every carrier operates. Another definition of digital insurance is any company using a technology-first business model to sell and manage insurance policies.
Is insurance Tech FinTech? ›Background: InsurTech can be described as the innovative use of technology in insurance and is a subset of FinTech, or financial technology.
What are 3 benefits of technology in healthcare? ›ABSTRACT: The advantages of health information technology (IT) include facilitating communication between health care providers; improving medication safety, tracking, and reporting; and promoting quality of care through optimized access to and adherence to guidelines.
What is insurance digital transformation? ›For insurers, digital transformation is “the process of using digital technologies to create new — or modify existing — processes, cultures, and customer experiences to meet changing business and market requirements.
What are the 6 D's of disruption? ›This growth cycle takes place in six key steps, which Peter Diamandis calls the Six Ds of Exponentials: digitization, deception, disruption, demonetization, dematerialization, and democratization.
What is the latest disruptive technology? ›Here is a list of top disruptive technologies we are seeing in 2022: 3D Printing. 5G and Improved Connectivity. Artificial Intelligence and Machine Learning.
What are the 4 D's of disruption? ›Rapid economic growth and 'the four Ds' of disruption, deprivation, disease and death: public health lessons from nineteenth-century Britain for twenty-first-century China? Trop Med Int Health. 1999 Feb;4(2):146-52. doi: 10.1046/j.
How is Blockchain used in insurance? ›Blockchain has the ability to help automate claims functions by verifying coverage between companies and reinsurers. It will also automate payments between parties for claims and thus lower administrative costs for insurance companies.
How does RPA help insurance? ›
Automation solutions for the insurance industry. From sales to underwriting to servicing to claims management and beyond, RPA and RPA + AI can improve insurance operations' agility, speed in response time, and get customer-facing digital capabilities up and running faster.
What are the 3 risks associated with insurance? ›There are generally 3 types of risk that can be covered by insurance: personal risk, property risk, and liability risk. Personal risk is any risk that can affect the health or safety of an individual, such as being injured by an accident or suffering from an illness.
What makes insurance companies fail? ›Management mistakes include multiple regulators and infrequent examinations, rapid growth in risky business areas, poor underwriting, extensive underpricing, excessive reinsurance or loan participations, bad management, and inadequate loss reserves.
What are the 6 characteristics of an ideally insurable risk? ›These elements are "due to chance," definiteness and measurability, statistical predictability, lack of catastrophic exposure, random selection, and large loss exposure.
What are the emerging issues in insurance industry? ›- Anti-Money Laundering and Know Your Customer.
- Financial Crime.
- Fraud and Risk Analytics.
- Fraud Management Services.
- Regulatory Compliance and Risk Reporting.
- Third-Party Risk Management.
- Banking. ...
- Capital markets. ...
- Insurance. ...
- Investment management. ...
- Pensions.
Some factors that may affect your auto insurance premiums are your car, your driving habits, demographic factors and the coverages, limits and deductibles you choose. These factors may include things such as your age, anti-theft features in your car and your driving record.
How technology is changing the insurance industry? ›An insurer can provide more customized premium offerings to customers if in fact they have a holistic view of the pertinent data. Pricing strategies, claim fraud mitigation, lead generation, and customer satisfaction are a few of the areas where data analytics can provide competitive advantages.
What are the 5 key challenges facing the insurance industry in today's marketplace? ›- Increased Competition. ...
- Technology Advancements. ...
- Outdated Technology Infrastructure. ...
- Rising Costs of Operations. ...
- Customer Engagements. ...
- Business Intelligence.
Most insurance companies generate revenue in two ways: Charging premiums in exchange for insurance coverage, then reinvesting those premiums into other interest-generating assets. Like all private businesses, insurance companies try to market effectively and minimize administrative costs.
What are the 5 key challenges facing the insurance industry? ›
...
6 biggest challenges for insurance companies
- Lack of trust. This is a reason why many individuals don`t bother with insurance. ...
- Competition. ...
- Mismanagement. ...
- Economic instability. ...
- Weak manpower. ...
- Excessive politicization of the insurance industry.
They want accurate information from their agent, available with just a single phone call. Consumers also expect the information they gather from their insurance agent to be tailored to their situation. They want empathy, advice, and meaningful information.
What are the five steps of the insurance process? ›- Connect with your broker. Your broker is your primary contact when it comes to your insurance policy – they should understand your situation and how to proceed. ...
- Claim investigation begins. ...
- Your policy is reviewed. ...
- Damage evaluation is conducted. ...
- Payment is arranged.
A Brief Overview of the Insurance Sector
25 Quick Tips to Improve Your Insurance Program
Four ways insurance companies are improving their customer ...
Digital transformation in the insurance industry has led to efficiencies in its operations through Artificial Intelligence (AI), machine learning and predictive analysis. Claims can now be processed through the ease of a mobile app instantly and have helped insurers to reduce the time in “policy writing”.
How has technology affected insurance claims? ›Technology has completely transformed the claims process. Most insurers now offer pre-populated claims forms, which allows customers to fill out a claims form more quickly without having to answer the same question over and over.
Which technologies are creating disruption in the insurance industry? ›AI and machine learning are new technologies that are creating widespread disruption in almost all industries.
How AI is bringing the insurance industry into the future? ›With AI, insurance companies can build platforms that process real-time data for prevention purposes and automate a big part of insurance executives' responsibilities, including data processing, fraud detection, and claim estimation.
What are digital products in insurance? ›As the name implies, digital insurance is an insurance product offered online or through a mobile app. These platforms use a combination of live customer service and digital algorithms to write and price policies.
How is IoT used in insurance? ›Commercial Insurers:
Commercial insurers use IoT devices, apps, and sensors integrated in industrial units to create a dynamic rating model that allows them to offer risk-based pricing to their customers. IoT apps that provide real-time data help insurers control risk and reduce losses dramatically.
How is AI used in insurance? ›
Some of the emerging AI use cases for auto insurance include: Predictive cost analytics for claims: Leverage machine learning techniques and data science to estimate the average claims cost per different customer segments. Adjust premiums respectively and manage your cash flow better.
Which technology has the greatest impact in claims management? ›Artificial intelligence, machine learning and data science are technologies designed to ensure a clear improvement in claims management, mainly if implemented throughout the process, and if can help claim managers.
What are the biggest challenges facing insurance companies? ›- Becoming experts in data management and security (no change) ...
- Preparing for (and limiting) climate change (up 3 places) ...
- Shifting towards new pension and healthcare models to address an ageing population (no change)
At its core, selling insurance requires human touch – building relationships, paying attention, being empathetic, and caring about feelings, these qualities will never be replaced by AI.
What are the 6 D's of disruption? ›This growth cycle takes place in six key steps, which Peter Diamandis calls the Six Ds of Exponentials: digitization, deception, disruption, demonetization, dematerialization, and democratization.
What is the latest disruptive technology? ›Here is a list of top disruptive technologies we are seeing in 2022: 3D Printing. 5G and Improved Connectivity. Artificial Intelligence and Machine Learning.
What are the 4 D's of disruption? ›Rapid economic growth and 'the four Ds' of disruption, deprivation, disease and death: public health lessons from nineteenth-century Britain for twenty-first-century China? Trop Med Int Health. 1999 Feb;4(2):146-52. doi: 10.1046/j.
Will robots replace insurance agents? ›But career prospects are downright scary for insurance underwriters, with a 99% chance of being replaced by their shiny machine counterparts and a projected “growth” of -11% by 2024.
Can AI replace underwriters? ›AI tools and insights – particularly those which apply Computer Vision models to geospatial imagery – offer a dynamic new way to analyze and identify real property risk. While it may never replace the expertise of human underwriters, AI has an undeniable role to play in the future of P&C underwriting.
How can RPA help in insurance? ›RPA enables organizations to overcome legacy application silos by allowing them to integrate all the claims processing data from various sources. Systems can use NLP and OCR to extract data and input, claims errors, and verify fraudulent claims. By limiting the human intervention in the insurance claims process.