Have you always tried to check your indemnity claim condition ? It often requires several calls, some emails, or flush visiting an agent to get title status details. miss of web presence equals lower customer satisfaction. today, closely 61 percentage of customers prefer to monitor their application condition with digital tools .
While some policy carriers have made meaning modifications courtesy of disruptive digitalization ( we ’ ve already discussed this topic in our whitepaper ), most companies trail behind. And the chasm between modern insurtech agencies and traditional ones is deepening. The break caused by Haven Life is a prime exercise. The company reduced time to process applications from what was normally 1-2 weeks to 20 minutes via their web site ’ south on-line questionnaire .
In 2019, insurers spent closely $ 225 billion on IT, in 2020 the pandemic slenderly slowed down the investments. The sum, however, is still quite low with bequest system complexity only slowing invention. According to McKinsey, nine out of ten-spot insurance companies identified bequest software and infrastructure as barriers for digitalization. As a resultant role, the big industry – which in the US accounts for $ 1.3 trillion – needs to urgently change the ways of business development. It ’ randomness clear that the make-insurance-great-again mission heavily depends nowadays on engineering borrowing .
Mike de Waal, president and founder of Global IQX, says :
“ Modernization of core bequest systems, newfangled indemnity exchanges and changing business models ( platform and peer-to-peer ) defined the year. They will continue to do sol as carriers adopt digital strategies… Juggling the barrage of new initiation and understand how it can be used to create a competitive edge–very quickly–can be disconcerting. however, these disruptive forces should be seen as the catalyst necessity for the kind of dramatic deepen required to spur increase and new insurance products. ”
vertical players look for a short pass to the digital age. Some companies make home changes by backing insurtech startups or establishing advanced labs, while the rest are only hesitating. What kind of changes should be made in the first seat ? These are the main problems to address :
- Internal processes of insurance companies are often too complicated.There are so many duplicating business operations that nearly 1 million insurance jobs in the US alone can be automated. McKinsey claims that automation and digitalization define the main potential of the industry. This means insurance companies can automate 50 to 60 percent of their back-office operations.
- Insurants are not satisfied with their service providers. The Morgan Stanley and BCG studies claim that insurance companies tend to provide poor customer experience. About 60 percent of insurance clients worldwide aren’t satisfied with their service providers and nearly 50 percent of insurance clients consider turning to newer models.
- Young prodigies prefer to join technology, consulting, or other financial companies rather than insurance. According to Deloitte, only 4 percent of millennials are interested in working in the industry. As a result, companies frequently don’t have enough technically-skilled employees to follow changes let alone drive them.
- In the face of the COVID-19 pandemic increasingly more consumers are looking towards providers with strong digital capabilities. A recent PWC survey claims that 41 percent of consumers are likely to switch their insurance company in favor of a more digitized one.
These are the problems. How to approach them ? Let ’ s discourse 13 opportunities that will lead the transformation from traditional insurance means to innovative insurtech fast .
- 1 Internal Workflow Automation with RPA and Machine Learning
- 2 Digitizing Paper Records with Optical Character Recognition
- 3 Machine Learning in Insurance: Automation of Claim Processing
- 4 Redefining Traditional Ways of Claims and Policy Management in the Age of Digital Insurance
- 5 Personalized Insurance Pricing with IoT and Social Media
- 6 Telematics Insurance – New Way to Make Car Risk Management Better
- 7 Disruptive Business Models – P2P Insurance
- 8 Insurance Blockchain Disrupts Reinsurance Operations
- 9 Chatbots for Insurance Company – Conversational Interfaces Power Virtual Agents and Brokers
- 10 Insurance APIs as an Easy Pass to Innovation
- 11 Insurance Fraud Detection Software Brings Industry to the New Level
- 12 Insurance Marketplace Brings Product Distribution to Online Space
- 13 Insurance Data Analytics: Ingestion and Data Pipelines
- 14 What Should the Insurance Industry Expect?
- 15 Final Word: Insurance App Ideas Worth Implementing
Internal Workflow Automation with RPA and Machine Learning
paperwork, manually written notifications, follow-ups, and underwriting are normally boring to do. Automation allows companies to reduce the cost that is spent on everyday work and refocus some full-time employees to more creative tasks. A persuasive model of cost-cutting is the automation of payout calculation at Fukoku Mutual Life Insurance. The company replaced 34 employees by AI and nowadays expects to boost productiveness by 30 percentage after complete system consolidation. It ’ s estimated that the tauten will save about $ 1.25 million in the inaugural year of AI use .
Mitchell Sharp, Marketing Associate with Insurance Shop, says :
“ The Insurance Shop went through a work flow review of our own processes and are working on implementing a work flow automation summons that we estimate will improve efficiency by 40 percentage – that ’ s dramatic and will give our customer service department more fourth dimension to focus on our client ’ sulfur real needs and less work ferment. ”
But AI remains a heavy investment. Depending on the make the car learning algorithm are going to do and regulations, it may require an explanation level over the core ML system .
On the other hired hand, the rehearse of RPA ( robotic process automation ) doesn ’ t constantly involve machine learn but can address routine and repetitive solve. RPA use guileless human-designed rules to do repetitive operations. european insurance group PZU partnered with UiPath, an RPA provider. The overall oscilloscope of automation covered nine areas of activities, including preliminary analysis of car damage claims, data submission, payments, and more. The ship’s company claims to have increased the numeral of decisions per employee by 15 percentage, reduced call times to customer overhaul in half, and achieved 100 percentage accuracy of data introduction .
Digitizing Paper Records with Optical Character Recognition
The other side of the problem is inbound agreement and documentation. Every day all fiscal institutions process and gather thousands of files in paper archives. That ’ s not the best way to store, procedure, and exchange data. It doesn ’ t contribute to saving the environment either .
If files are digitized, analyzed, and stored in a cloud, documents can be mechanically reviewed and rejected in the case of discrepant data or errors, which allows insurance staff to deal only with reproducible and right information .
The customer data that has been collecting dust in composition archives for decades is no longer an expending item in a profit-and-loss statement. If you apply ocular quality recognition ( OCR ) algorithm, these become valuable assets that tell an insightful story about your customers. The real life applications of OCR appeared in the early 2010s. therefore, there ’ mho nothing new to the technology except increased accuracy of the underlie machine learning algorithm able of digitizing text .
And fortunately, online text file management in indemnity gets increasingly more common. however, even today agents have to deal with a variety of documents : in newspaper, in scans, in e-mail, and early formats.Translating this data into structure records is excessively time-consuming for humans. And the need for OCR technologies is placid there .
Machine Learning in Insurance: Automation of Claim Processing
besides AI policy software reshapes claim process. Ask yourself how long it takes for your agency to make claim decisions. There are lots of issues with a kind of setting : a break finger, a bad car accident, the burn in a lavishness villa, or a significant agrarian claim from a big corporate client. Assume that their US land bank was affected by drought. There are thousands of acres across the nation sow with crops. How long would it take for employees to gather and process all data required for payout decision-making ? There ’ s a good way to cut costs for such projects by employing AI. Machine learning algorithms can calculate detriment using satellite images or drones to explore fields. It will eliminate the human component and significantly cut time and cost .
source : Scor
claim report is besides changed by a combination of machine learn and mobile technologies. State Farm arms clients with a Pocket Agent app. A customer can send the vehicle trope and the claim will be submitted without wasting time on dealing with composition documents or large web forms .
Redefining Traditional Ways of Claims and Policy Management in the Age of Digital Insurance
Besides AI-driven automation, claims management gets impacted by a broader spectrum of software solutions .
Claims management is a critical clientele process of any indemnity caller, which starts with call registration and ends with payments to the guarantee party. Claims management software reduces manual work flow and a number of human-to-human interactions. Clients need less time to apply and smoothly proceed down the path of call handling. From the policy carrier wave ’ s point of horizon, the company reduces labor costs via automation .
here is an model of the modern industry criterion. Assume an indemnity party operating in the healthcare segment .
- Claim management software automates information exchange between insurance and healthcare provider systems.
- If the company deals with a number of small private practices – which still work with paper documents – the import is streamlined by image recognition algorithms that digitize the documents.
- The system calculates coverage and payment for each claim according to set policies.
- The system processes claims and sends them to a fraud detection module.
- Once the claims are approved, insurants receive their payments.
The policy management software must be the integrated function of the system in ordering to provide business users with instruments to manage reconciliations, customize business logic, cope policy rights, etc .
The software by SAP, Oracle, Patra Corp, GuideWire, Claim Kit, and Insly fulfills standardized needs in claim and policy management tools for the insurance diligence. however, the vanguard of innovations are insurtech startups and engineering consult companies which employ the power of AI, Blockchain, and IoT technologies .
Personalized Insurance Pricing with IoT and Social Media
The antique expressive style of gamble assessment is to rely on impersonalized datasets. But nowadays, end point devices and social media can provide large amounts of more personal datum. The approach can help both insurers and customers – consumers get cheaper or better coverage and highly individualized services, while a business gets more accurate risk appraisal, stable margins, and quenched clients. The recent Accenture study demonstrates that such a model is viable – more than three quarters of customers are ready to share personal data to get cheaper risk coverage and personalized fiscal and policy offers .
generator : Accenture
An insurance broker can consider a broad roll of highly personalized records. Connected devices and wearables provide deep insights into the customer ’ s physical circumstance, like rake pressure, temperature, pulse. now, the insurance company can even explore the node ’ south life style patterns, such as the total of steps per sidereal day, or how often and how long it takes person to brush their teeth. social media data from Facebook, Twitter, or other networks besides could be utilitarian. It discloses customer risk tolerance with the application of machine teach or other predictive analytics techniques. In accession, all this datum is available in real time, which provides extra value for indemnity companies. Dennis Barnes, RGAX CEO, related the character of using historical call center data to identify customer emotions during a earphone call option and analyze customer satisfaction levels .
Beam is another relevant example. The company uses IoT engineering to offer alveolar consonant insurance. A chic soup-strainer tracks how well customers take care of their teeth. then the company provides a individualized policy plan based on teeth-brushing data. The firm claims that it can offer up to 25 percentage lower rates compared to competitors .
Telematics Insurance – New Way to Make Car Risk Management Better
Telematics policy is a group of innovative car insurance products that get installed immediately into a vehicle. The device includes a GPS system, apparent motion sensors, a SIM card, and has analytics software. A telematic box tracks speed, location, time, crash accidents, driving distances, breaks, and other driving data .
first, the system processes gathered information and transmits it via the mobile Internet to the insurance company for far analysis. then the drive analytics are added to a customer personal account .
By tracking drivers ’ behavior insurers can create tailored indemnity plans and improve hazard management. For exemplify, a company can increase charges from irresponsible drivers, reward customers for safe drive, and advise police in the consequence of a car accident. Telematics adoption allows for utilizing such disruptive commercial enterprise models as :
- usage-based insurance (UBI)
- pay-as-you-drive (PAYD)
- pay-how-you-drive (PHYD)
There already successful use cases. A united kingdom telecommunication company, O2, has launched a special car policy product that supports the estimate : the safe you drive, the better price you get. Driving habits are tracked by a particular device and users can track their scores on a mobile app after each travel or current data via an API. The O2 app besides assists customers by giving tips on improving their tug and mitigate risks.
Read more: Top 10 cyber insurance companies in the US
Disruptive Business Models – P2P Insurance
Peer-to-Peer ( P2P ) indemnity is one of the most disruptive business models which is quickly gaining its popularity due to an available technology basis. The model entails that the net of people agree to cover alike risks by creating a single finance pool consisting of their premium shares. The P2P model doesn ’ deoxythymidine monophosphate require traditional intermediaries – indemnity companies .
At the end of each coverage period, available money is refunded. This way, customers minimize their costs and mitigate call conflicts. however, the exemplar has several drawbacks such as imposter sensitivity, ethical aspects, difficulties in achieving consensus, and the lack of reliance between peers .
The P2P indemnity has already passed three main milestones :
- Insurance distribution. For instance, Friendsurance is a startup that connects small groups of people (10-16 insurants) via a mobile app. If an insured event occurs, an insurant reports a claim via Friendsurance and gets coverage. As soon as a contract expires, customers gets pre-agreed cashback from the funds available in the pool. Friendsurance is focused on small risks related to property (e.g. a broken window in a house).
- Insurance Carrier. A good example of P2P insurance carrier is Besurance. The company is an Insuretech risk-sharing platform that groups insurants by their risk similarities. The process is handled with actuarial software which provides respective groups with a proper quotation. Claims are assessed and approved by community members.
- Self-Governance. An example of self-governing insuretech organization is Teambrella. Teambreala offers a blockchain-based insurance platform. It’s a regular P2P network, but powered by blockchain. For claim and policy management, the company uses Ethereum smart contracts. They allow for transparency and self-regulation. Participants discuss each claim and vote to meet consensus on claim coverage. If the claim is approved, each participant shares a part of their premium with a damaged peer.
Insurance Blockchain Disrupts Reinsurance Operations
Blockchain implementation is a $ 5-10 billion cost-saving opportunity for reinsurers cosmopolitan, according to PWC. The nature of reinsurance is close to chain structure. No wonder it is recognized as the second largest distributed ledger use sheath in fintech after payments. The major benefits for stakeholders are decrease of confirmation and validation time, elimination of errors and minimization of reputational risks. By using blockchain, a reinsurer won ’ t have to interact with the insurance company to get data provided by node. For example, you need to verify respective insured events for one health risk reinsurance narrow. If all parties are connected by fresh contracts, the reinsurer will be able to get direct access to an insurant ’ s health data .
Another healthy estimate is the prevention of reinsurer ’ s a loss access. The key trouble here is the loss unevenness at different stages of call handling due to complex documentation process. Blockchain solves the topic by recording the passing estimates history for each contract. It enables better liability tracking and difference resolution .
Chatbots for Insurance Company – Conversational Interfaces Power Virtual Agents and Brokers
Each class insurance agents spend thousands of hours supporting customers in the decision-making process, providing criterion on-demand information or reports. Chatbots, report tools, mobile technologies, and voice recognition algorithms can easily automate these boring operations. Chatbots can perform a efficaciously as a big customer care center and drastically cut costs in customer support and sales .
generator : McKinsey
Some US indemnity carriers are already armed with such technologies. In Canada, Ontario-based Excalibur Insurance has employed AI bots to automate their client interaction. not merely is the insurance company available 24/7 via a web site or Facebook, but the organization besides engages new clients, deals with claim reports, and service requests. It ’ s a good alternative to earphone calls as 70 percentage of callers hang up while waiting for customer care to respond. besides, smart systems can send reclamation notifications, delegate tasks to agents, and build warm relationships by sending friendly greetings and extra offerings to clients keeping them engaged .
But chatbots can be employed as supportive tools for agents adenine well. For example, during underwrite and interview customers, agents don ’ t have to send received information out to get follow-up questions. They can use customer inputs to immediately receive follow-ups from a chatbot .
Insurance APIs as an Easy Pass to Innovation
Over-regulation, antique business models, and the lack of engineering talent slow down industry initiation, which is harmful to customer experience. Customers demand flexible and innovative experience. According to IBM, 41 percentage of insurants abandon their carrier wave for a raw one because the provider doesn ’ triiodothyronine want to adjust services for customer needs .
The use of indemnity APIs ( application programming interfaces ) addresses this lack of insurance company tractability as they can contribution information and services with third parties. Companies get an opportunity to suggest better customer know, create new digital products, addition sales, and try disruptive business models .
For exemplify, an insurance company with its own API can enter the on-line change of location policy market and rise sales through the partnership with OTAs ( online locomotion agencies such as Booking.com or Travelocity ) by cross-selling services to travelers directly from the partners ’ web site .
On top of that, third-party APIs are used by policy companies checking customer data to prevent pervert and fraud .
hera are some examples of policy APIs and APIs that can be utilized by insurtechs :
AXA Insurance. In 2017, AXA Insurance launched its own API, which helps the ship’s company utilize Insurance-as-a-Service scheme pioneer in the Asia region. AXA API well integrates with eCommerce websites and applications. The technology provides real-time access to indemnity services, including quotation, policy management, and insurance offerings in home, travel, and car segments. The carrier wave plans to introduce their API the health and biography indemnity segments in the about future .
The Lemonade Public API. The Lemonade Public API is an API developed by a place policy company Lemonade. The API allows for integration with the variety of digital products ( iOS/Android apps and Websites ). Lemonade Public API provides a developer with products, citation, policy initiation, and payment functions. The API besides suggests a customizable chatbot interface .
NAIC Registry. NAIC Registry is a public policy API which automates standard reporting progress with the regulator, allows for extracting and storing data in Online Fraud Reporting System .
Insurance Fraud Detection Software Brings Industry to the New Level
Fraud is a great calamity of the policy industry and fraud detection software is on the rise. According to Coalition Against Insurance Fraud, US carriers lose at least $ 80 billion annually. On average, it accounts for 5-10 percentage of claims costs for north american policy companies. Cloud and fluid technologies can support insurance agents with real-time information to deal with duplicate claims, inflate claims, fake diagnoses, juke dependent family members, mutually exclusive diagnoses, insurant data inconsistency, overpayments, and inner employee scams. For case, a node claims payout for a lost right eye twice or tries to recover from the same property fire by counterfeit documents with a transfer date. The system will compare the claim data with the database and identify the fraud. This will reduce cost by increasing functional accelerate, delivering higher accuracy, and removing the charm of an matter to party .
For exemplify, Shift Technology offers indemnity fraud analysts an end-to-end organization. The Shift Technology solution goes beyond traditional title scoring based on probability analysis. additionally, it provides business users with actionable analytics indicating why the claim looks leery. Its SaaS delivery model enables low execution cost and easy connection to existing operations. According to Shift Technology, their software instrument demonstrates 250 percentage better fraud designation rate than the commercialize average .
Insurance Marketplace Brings Product Distribution to Online Space
long gone are the days when clients had to call or visit the policy agent to get a policy. The web made people more aware of offerings on the market and today anybody can easily compare products, review testimonials, or find special plans that match personal requirements. Insurance shopping platforms like Insurify, CoverHound, and Friendsurance are actively redefining distribution models. While clients can get more specific about what they are looking for, military service providers gain more visibility if they comply with demand. These marketplaces help insurers cut distribution monetary value and, at the lapp time, bring in even more well-targeted leads .
Nick Braun, Founder of PetInsuranceQuotes.com, says :
“ The biggest change that we see is how mobile is changing comparison shopping. Pet policy marketplaces are becoming more and more popular. This drift will force providers to create on-line quote, servicing and APIs, so they can reach and serve this new consultation. ”
Insurance Data Analytics: Ingestion and Data Pipelines
About 50 percentage of insurance executives acknowledge the importance of data analytics in the near term. A recent Accenture survey shows that analytics is the second most critical digital invention branch after cloud-based technologies. We mention that as an away because overcast calculation and storage no retentive considered disruptive are basically enablers of nowadays ’ second digital transformation .
source : Accenture
so, let ’ s concenter on analytics and their enablers. While we ’ ve discussed multiple technologies that drive disruptive change in the diligence, most of them will remain isolate experiments without a solid datum scheme and a centralized data management pipeline .
As Deloitte was highlighting in 2018, one of the problems in the industry was the siloed nature of analytics initiatives. In other words, analysts were scattered across organizations and there was no general strategic vision on data and its respect. Data-driven systems were sporadic and with no sustainable effect. On exceed of that, there was the trouble of data consumption : How do we gather the data ? How do we connect to data sources ?
According to some experts, 2019 was the class when most problems with data consumption were solved. so, today it ’ s a matter of designing centralize digital pipelines with several core capabilities :
- data ingestion from internal document management systems, enhanced with OCR technologies
- access to third-party and publicly available data via APIs
- powerful ETL (extract, transform, and load) systems capable of structuring data for its further use
- having a single source of truth represented by a data warehouse
- flexible data querying and visualizing capabilities. The best practice here is to centralize data but allow each individual data analyst and data scientist to query this data using the tools that they prefer, those that match the task at hand.
- ensuring HIPAA compliance for life insurance.
Having these steps completed, policy organizations will have a potent foundation for the further digital initiatives .
hera ’ sulfur our video on how datum infrastructures and data teams work
What Should the Insurance Industry Expect?
Digital technologies bring respective disruptive trends to the policy clientele such as personalization, the shift to a platform economy, automation, and actual time-based estimates preferably than historical ones. What are the features with the most shock ?
- Cost cutting. A digital insurer gets strong competitive advantages over the traditional carriers. According to BCG, the disruptive technology change allows for cutting up to 10 percent in premium costs and 8 percent in claims expenses. The turn to the web platform ecosystem allows for cutting distribution cost and reaching better communication with customers by social media, emails, mobile apps, etc.
- More accurate risk assessment. The digital business model enables better risk assessment and sometimes even aids in preventing insured events when it comes to driving assistance or health and lifestyle monitoring.
- Better customer experience. The use of mobile apps and social networks integration enables better understanding of a customer and ensures 24/7 availability.
- Move from reactive to proactive decision-making. Insurance is a data-driven business that ought to consider numerous factors about customers and strongly rely on statistics. However, the industry still leverages historical rather than real-time data. Various wearables and sensors are yet to reach their potential of data streaming and hyper-personalization.
- Expanding portfolio. The wide range of data records allows insurance carriers to cover very specific risks and work with new micro-segments. It also reconsiders the nature of incurrence products (e.g. bring them to a pay-per-use basis).
- Insurers become more insulated from scams. APIs and mobile shorten the time it takes for fraud detection and makes the assessment process more rigorous.
Final Word: Insurance App Ideas Worth Implementing
The industry has a firm demand for technology talents and needs documentation or partnership in the advanced process. Mobile and omnipresent automation have already become the world of policy. here are the points to consider about enterprise mobility that we covered before. Insurance apps and agent management software makes claim treat and communication easier and smoothly for digital grok clients .
AI, IoT, Blockchain, API, wearables, and Telematics are emerging technology trends of the near future that should be taken into report to stay ahead of the contest and will decidedly impact the future of indemnity. New engineering allows policy carriers to build better customer experience and boost functional efficiency .
- Wearables and Telematics track customer behavior, enable risk prevention, and open the path to new business models.
- AI insurance solutions allow companies to offer personalized quotations for customers, integrate robo-advisors, and improve fraud detection.
- Blockchain helps improve workflow governance and ensure transparency.
- Insurance APIs simplify information interchange, boost product distribution via online channels, and eventually let insurers suggest more versatile products.
The insurance industry is on its way to digital transformation. Customers demand changes and advanced products, this factor is a solid reason for them to change a carrier in 2018. Insurtechs, digitized indemnity companies, and technical school giants will crowd out laggards from the grocery store .