Like many industries, insurance is undergoing a period of significant change due to emerging and developing technologies. AI (artificial intelligence), ML (machine learning), IoT (Internet of Things), data analytics, and blockchain in particular are transforming the way insurance brokers offer customer service. A growing number of companies are embracing these technologies, and their use is becoming standard practice in the insurance industry.
What is InsureTech?
InsureTech (often known as insurtech) is a portmanteau of the words “insurance” and “technology” — similar to how finance technology is often known as “fintech”. InsureTech is an umbrella term, and typically refers to the use of AI, ML, IoT, data science, blockchain, and more to offer insurance to consumers.
InsureTech can be used to customize and personalize insurance policies and premiums to degrees of accuracy not previously possible, and also to make processes faster and more straightforward. InsureTech is used to provide all kinds of insurance, from home and landlord insurance to business and auto insurance.
How Does InsureTech Work?
InsureTech can remove the need for “middleman” insurance agents by using AI and ML algorithms that can automatically analyze data provided by customers and use it to price premiums dynamically. Many companies use smart chatbots that are available to communicate with customers 24/7.
Algorithms can use historical data to generate predictive models to create accurate, specific premium offerings, and customer data can even be continually analyzed to generate future offerings.
For example, a customer’s auto insurance premiums could automatically be reduced from their initial amounts if the customer drives safely and without incident while insured. This would be carried out by a combination of AI, ML, automation, and data analytics, all taking place within a single piece of software. Algorithms can also detect fraud much more efficiently and quickly than human agents can.
Distributed ledger technology (often known colloquially as blockchain) can enable immutable governance of customers’ information and the provision of “smart contracts”.
Smart IoT devices in homes or vehicles can even collect data on the usage of these (for example, the speed and safety of driving), and this data can be continually evaluated by algorithms. This practice is somewhat in its infancy, but it is likely to become a more significant aspect of the insurance industry.
Claims management processes, which were once usually carried out manually, are becoming increasingly automated. The same is true of underwriting (assessing the degree of risk and then offering insurance packages) and paying out claims. This increased efficiency benefits customers and insurance brokers.
Who is using InsureTech?
Many insurance brokers are now using InsureTech to provide improved customer service and more accurate, personalized offerings. The extent to which brokers have replaced manual processes and human agents varies widely — for example, companies make extensive use of InsureTech while human experts also provide input.
There is no doubt that technology is rapidly and significantly transforming the insurance industry in all of its forms. This is benefiting consumers and brokers alike. In all industries, companies must adapt to change, especially in the modern world. Organizations that fail to adopt InsureTech to any degree are likely to fall behind.