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26 Oct 2018

Digital Transformation for Insurance: 2018

Sometimes, it seems that the insurance industry is lagging behind while innovations are altering other industries like entertainment, education, and healthcare. However, changes are inevitable, and the only question is who is going to introduce them first. Those who decide to pass on implementing new technologies will be losing in their competitiveness until they face bankruptcy.

The thing is, introducing innovations is a game changer for becoming a front-runner because this reduces costs, improves the customer experience to increase the number of customers, and, ultimately, allows you to make more profit.

Top 5 Insurtech Trends to Watch Closely

To help you stay ahead of the competition, we have prepared a list of the top 5 trends (in no particular order) that mark the contribution of insurtech to the insurance industry. So, let’s see what insurtech has up its sleeve.

#1. Automation is Here to Replace Human Effort

This trend has invaded every industry out there, and insurance is no exception. Almost every working process can be improved (i.e. made faster) with the help of artificial intelligence, Big Data, machine learning, predictive analytics, blockchain, Internet of Things, etc.

For instance, underwriting can be done by algorithms. Communicating with your potential and current customers can also be automated in many ways: an agency management system for CRM, AI-powered chatbots, personalized bulk emails, even automated insurance agents, etc. What is more important, now, insurers can sell their services directly online without having to pay commission fees to brokers.

There is one more trend: digital advisors are replacing traditional brokers. It is an AI-powered chatbot that helps customers choose insurance products and answers their questions. All of this benefits insurers by cutting costs (mostly labor costs) in the long run.

#2. Predictive Analytics is Going to Transform Decision Making

Our era is the era of big amounts of data. All the data about your potential and existing customers is out there—you just need to collect and process it.

Processing and analyzing it can give tons of insights into every customer’s individual behavior, preferences, etc. to personalize communication and marketing campaigns. This is not new news. What is more interesting for insurers is predictive analytics.

As you can understand from the name, data can be analyzed to predict future behavior and risks. This allows assessing risks for every particular case (i.e. the person and the type of insurance) and adjusting premiums according to the results. For example, those who are more likely to have a heart attack will have to pay more for health insurance.

Moreover, predictive analytics can be used for making vital decisions by the insurance company’s top management as they can predict the outcomes of various options that are on the table. Algorithms in the best insurance agency management systems can process and draw conclusions on the amount of data the human mind will need years to comprehend.

#3. Ecosystems are Going to Thrive

Ecosystems are the comprehensive solution to customers’ needs. An ecosystem integrates several services on the same platform. For instance, it allows buying insurance products directly through retail sites or booking flights, accommodation and buying insurance etc. on the same platform.

The thing is, customers want to get everything they need in one place, without having to browse several sites or use different apps. To take advantage of this, insurers need to clearly understand customer needs and the customer journey. Then, it is easier to see how to reduce the number of actions customers have to take to get what they want.

#4. Blockchain is Here to Remove Friction

Blockchain technology is transparent, secure, trusted, and immutable, and this is why it is gaining more attention from insurers–top companies are already experimenting with applying it to insurance products.

Blockchain has a huge potential in the industry. It can automate keeping disparate ledgers synchronized with each other by eliminating double-keying and duplication, which has been a pain point for brokers and insurers for years. Furthermore, a blockchain-powered solution can make insurers’ liabilities and obligations clear and transparent, which is good for the brand’s reputation.

Even though it has a promising future in terms of reducing the cost of the insurance services, blockchain is still in the research phase.

#5. IoT is Going to Power Insurance Software

You already know how much can be done with data analytics. Internet of Things is what can supply those algorithms with enough relevant data for analysis, and the opportunities for this are boundless. The IoT network can collect data from smartwatches, smartphones, cars, home appliances, cameras, etc.

Still, we can pinpoint the main trends of IoT application in insurance:

  • fit tech,
  • sensors on objects,
  • location-based sensors,
  • geographic systems.

These technologies’ main purpose is to collect data about clients’ behavior. The data can be processed and analyzed to personalize the services (e.g. adjusting premiums via life insurance software solutions), assess risks, etc.

Besides, IoT can power new business models, such as “pay-as-you-live” or “pay-as-you-drive”. Let’s slow down a bit and take a closer look at all the ways IoT can change the insurance industry.

How IoT Can Transform the Insurance Industry

Unlike blockchain, IoT is already implemented in many solutions that traditionally-minded insurers can only dream of. How can IoT alter this particular industry? Let’s find out about the 9 examples of IoT application in insurance software:

  1. tracking health data (for instance, via a smartwatch) to reduce premiums for those who live a healthy lifestyle;
  2. tracking data about car usage and issuing bonuses for driving it safely or warning the driver about the potential consequences of dangerous driving;
  3. monitoring customers’ personal preferences in order to customize communication (e.g., the channel used for communication, the optimal time for sending a message, etc.);
  4. connecting to smoke alarms in a house to reduce the risk of fire;
  5. using drones to look at the damage on-the-spot without sending employees;
  6. using a smart toothbrush to track dental health, give bonuses for regularly taking care of oral health and adjusting premiums (it’s not a joke–it is a real case in the industry);
  7. introducing digital doorbells with cameras, image recognition, etc. to improve safety by reducing the risk of robberies or assaults;
  8. tracking weather conditions for processing claims for reimbursing weather-related damage faster (this is a shout-out to P&C insurance software vendors);
  9. powering new business models (such “pay-as-you-live” or “pay-as-you-drive”).

Are you ready to join one of these trends or start your own? Reach out to us, and we’ll get back to you to discuss your project.

The Bottom Line

Will insurance brokers survive in the long run? Well, only the ones that take advantage of the main insurtech trends in time. In summary, we have prepared a table of all the trends you should look out for in 2018 – you can see it below.

Don’t just watch someone pioneering new technologies – introduce the innovations yourself. Take advantage of the main trends while they are still trending. However, beware of perfection paralysis – this process takes time, so don’t expect everything to be perfect on the first try.

Knowledge is power. IoT solutions can give all the knowledge you need. Let us be the insurance software developer that brings you such a solution – drop us a line to discuss your needs.

In case you are hungry for more information on the related topics, be sure to check out our blog.

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