A time traveler from even the early 2000s would probably be shocked at the world we live in today. Rapid advances in technology have reshaped our experiences at an unprecedented rate in most areas of our day-to-day lives; soon, insurance will be no exception.
Read on to understand why it’s imperative that your company stays on top of these new technological trends.
Insurance has remained stagnant for decades
Prior to the last couple of years, the insurance industry has generally not been as heavily impacted as most other sectors have been by the technological advances of the twenty-first century. Perhaps the complex nature of insurance (which often causes people’s eyes to glaze over) has prevented customers from expecting insurance to become easier to navigate, even as many other services have been striving to meet the need for convenience.
But change is coming. An increase in competition, world changes, and inevitable spillover from advancements in other industries have finally spurred changes in the insurance industry.
There are three key tech advancements that are changing the face of insurance, which we’ll highlight today: artificial intelligence (AI) and automation, telematics, and digital enrollment.
AI and Automation
For insurance companies, AI and automation have significantly impacted marketing, customer service, claims processing, underwriting, and fraud detection. From chatbots to far superior risk assessment of hard data, AI is becoming indispensable in the insurance industry.
Some Companies are Only Seeing Moderate Success
Up to this point, though, the use of AI has still been hit or miss for some companies.
For one, traditional companies have had a hard time convincing their client base to adopt new technology, such as mobile tracking. While companies like Root are drawing their customers in with the prospect of usage-based premium determination, others are struggling to convince existing customers to utilize the exact same tools. Even when it could mean saving them money, there are still a lot of people who feel that having their driving habits tracked by their mobile phone is a violation of their privacy. Others believe it will lead to more negative consequences than benefits.
Many traditional insurance companies have held back from augmenting their model with new technology or are not requiring customers to implement it (even when they’re offering it as an option). So far, they have stayed competitive while sticking with the old ways; meanwhile, early adopters are encountering new obstacles and adapting to overcome them.
But it’s important to note that, as AI improves and bugs are worked out, the companies that have stayed back will have a lot of catching up to do and may lose business until they can become competitive again.
Automation Offers Speed and Process Advancements
Despite the drawbacks of imperfect systems that are still being developed, the speed and process advancements that come from automating jobs previously done by people are unquestionably advantageous.
With the computing power and memory capacity offered by automation, it’s astounding how much more data AI can process in a fraction of the time in comparison to the old, human modalities that insurance companies have relied on for decades. When it comes to underwriting, claims processing, and fraud detection, automating these processes is the obvious choice. The time and money-saving processing power of a computer performing risk assessment and data collection is a crucial component of any forward-thinking insurer’s business model.
It is a work in progress, but it is progressing
One of the most challenging areas for adopting AI and automation is within customer service departments. While chatbots can reduce the burden on live agents, they can be infuriating for customers whose questions fall outside of the AI’s limitations. Along the same lines, it can be difficult to encourage customers to utilize online resources when they’re more comfortable calling in their questions instead.
Other weak points include the potential consequences of severely underestimating risk and under-collecting on premiums if there’s a miscalculation somewhere in the process.
Despite these setbacks, it’s clear that progress is coming. It’s undeniable that there have been mixed results for different insurance companies, but becoming discouraged and abandoning the development of this technology would be a mistake. Not leveraging efforts on these trends now will only lead to more painful growing pains later; it could be devastating to your business if you were left behind once this technology has become an industry norm.
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Telematics are changing risk management
In the past, the determining factors behind insurance rates were often driving history and personal information like age, gender, etc. Unless a driver accumulated accidents or tickets, it was nearly impossible to gauge their skill (or potential risk) as a vehicle operator.
But with the emergence of telematics (where telecommunication, vehicular technology such as road safety, and computer science are combined), the statistical safety of an individual driver can be calculated to a degree that was previously unimaginable. With a simple app on a smartphone, insurance companies can know how their client drives and exactly when and where they drive (most focus on statistics on how quickly a driver turns or stops, side-stepping the question of obeying speed laws). Additionally, with more and more data, generic statistics of a group can be more accurately judged as well.
Most notably, insurance companies like Root (as well as other big-name auto insurers) are using devices to track driving usage and safety to determine premiums. This type of usage-based insurance is picking up steam because it saves money for both the insurer and the insured. This is because insurance companies are better able to assess the risk of a particular driver and neither over nor undercharge them; meanwhile, the savings are passed along, and truly safe drivers are offered much better rates than before.
Digital enrollment is increasingly pervasive
Far and away the biggest trend across all corners of the insurance industry is the success of companies who fully commit to digital enrollment. While artificial intelligence and optimal utilization of collected data will require more development and fine-tuning, there’s no reason to not make it quick and easy for customers to enroll in policies right now.
With the implementation of a digital enrollment platform, customers can get fast, reliable quotes and put a policy into force in one streamlined process. Less paperwork not only speeds up the experience and reduces transcription errors, but it also appeals to the customers’ need for convenience.
With a user experience that’s fast and easy, sales can become a completely automated and painless process for both brokers and customers. Adopting this technology is an obvious necessity for insurance companies, both big and small.
Although the insurance industry has been slower to adapt than other industries, potential customers are beginning to expect the process of signing up for a new policy to be as accommodating as the other aspects of their lives; and insurers who fall behind in this trend will surely be missing out on new customer opportunities.
Keeping track of trends is critical
Now that the insurance industry has arrived at the turning point for a technological revolution, these tech trends will become critical in order to remain competitive in a rapidly changing market. Nevertheless, it will also be essential to identify which tech-based solutions are worth pursuing and which will fade away or be quickly replaced with better technology. When navigating this new and exciting era for insurance, Genius Avenue is here to help your company successfully capitalize on the opportunities presented by the latest technology in the field.