5 Tech Trends In The Insurance Sector
No matter which industry you operate in, digital transformation has become a necessity, to keep up with consumer expectations and market trends. The COVID-19 pandemic put companies under even more pressure, to improve their technological infrastructures, as quickly as possible.
In the insurance sector, there are many different types of technology available, offering benefits for insurance firms and their customers. Insurance carriers must improve their digital systems and practices, to remain competitive and succeed. To support your own digital transformation, let's consider a few of the most prevalent tech trends in the insurance sector.
1 . Artificial Intelligence Tools
According to Oberlo, ‘there are 111.8 million people in the US using voice search features – a 9.5 percent increase from the previous year.' Reports indicate that we can expect an increase to 122.7 million users during 2021.
Insurance companies are using voice technology to offer more value to their customers. For example, Amazon Alexa can be paired with guestimator tools, to offer automatic quotes.
When purchasing insurance, customers want personalized experiences. With the help of AI, insurance firms can create these experiences. AI technology can be used to leverage a large amount of customer data, based on consumer preferences and behavior.
What's more, insurance firms can use AI to improve underwriting procedures and cycles for insurance claims. AI can help companies to streamline their processes and minimize errors. McKinsey suggests that ‘As AI becomes more deeply integrated in the industry, carriers must position themselves to respond to the changing business landscape.'
2. The Internet Of Things
Most customers will share their personal data with insurance companies, to improve their chances of getting a better insurance deal. With the help of the Internet of Things, insurance firms can save time by automating the sharing of data. Companies can collect data in various ways, accessing devices such as wearables, automobile sensors, or smart home devices.
Mckinsey has stated that ‘IoT technologies enable insurance companies to determine risks more precisely.' For instance, car insurance companies used to rely on basic indicators (such as credit score or age). Thanks to IoT, insurers can access more insightful data, including driver behavior and vehicle usage.
With more data available, rating models for insurance packages are gradually improving. Using more valuable data, insurers can offer risk-assessments that are more personalized. With more accurate risk analysis, insurances can offer fairer premiums. Using insightful data, insurance companies can even improve and adapt their products, in response to customer preferences.
3. The Use Of Drones
Drones can be useful in the insurance sector, and we can expect to see more carriers using drones throughout 2021. Drones can be beneficial in several ways, including assessing risk, supporting preventative measures, and analyzing damage in the event of a loss.
Balance Small Business believes that ‘Drones enable insurers to save time and to focus their resources where they are most needed. For example, suppose a massive flood occurs, causing destruction that extends across many square miles. They can plan their adjusting activities based on the data they collect.'
4. A Focus On Predictive Analytics
Many insurance companies use predictive analytics to gather data, utilizing this data to better understand customer behavior. Predictions about customer behavior can be particularly helpful in the insurance sector. There are plenty of ways that insurance firms can use predictive analytics. They can determine the possibility of fraud, support risk and pricing elements, or figure out which customers are likely to cancel. Predictive analytics can also be used to discover trends.
Predictive Analytics Today explains that ‘Predictive analytics is used in rate making, the price setting of policies, where statistics and probability to approximate the rate of future claims based on a given risk.'
5. Insurtech Providers
A growing number of insurance companies have emerged over the last year or so. What is insurtech? Simply put, insurtech means insurance technology. Insurtech companies develop state-of-the-art technologies to support the insurance industry. An insurtech company can provide solutions in the Internet of Things, AI, predictive analytics, and more.
With the help of Insurtech, the insurance process becomes more efficient and simple, whether you're a broker or a customer. Further examples of insurance technology include the use of blockchain data or utilizing data from social media.
According to Statista, ‘The value of capital being invested in insurance technology companies globally is on the rise. The market for underwriting improvements is set to grow by over 60 percent.'
With plenty of emerging trends, 2021 is set to be an exciting year for the insurance sector. To remain competitive and drive growth, insurance companies need to adapt to a digital landscape, and pay attention to business technology trends.