In the world of insurance, risk assessment and claims processing are two areas that have benefited the most from emerging technologies. Though the insurance industry has been somewhat slow in its digital transformation, it's begun to evolve at a breakneck pace. This only makes sense, given how quickly tech is changing the world (and consumer expectations.)
A recent Accenture survey highlights just how open insurance leaders have become to embracing the latest technologies to refine their workflows. According to the survey findings, 61% of executives in the insurance marketplace say they're focused on reinvention. Technological tools and strategies are a big part of the overall reinvention journey.
To understand how much impact tech is having on risk and claims, take a look at some of the most prevalent current technology use cases in insurance. Each one is an indicator of how much progress has already been made—and where more progress is likely to occur.
1. Granular data availability is personalizing risk and rates.
Many homeowners are concerned about the rising costs of homeowners insurance across the country. This is especially true among homeowners whose properties are in catastrophe-prone areas like Florida. For some, merely finding insurance can be problematic, as many carriers have withdrawn from providing insurance in those regions.
However, technology is allowing forward-thinking insurance providers like Kin to leverage cutting-edge data analytics and AI to reconsider ways to serve the high-risk homeowner population. Rather than using just aggregate data to determine property owner rates, Kin has developed a system that can factor granular (raw) data points into its risk calculations. Consequently, homeowners may be able to enjoy lower premiums than they expect because Kin's proprietary algorithms can evaluate multiple data points at once.
Here's how this can work: FEMA may list a certain flood zone as having a 26% chance of going through a flood within a 30-year period. Yet, this is a very broad characterization and may not reflect the most accurate assessment of a property's true risk. Kin's systems leverage additional data sources, including aerial views and geospatial analyses, to determine if the home's actual risk is less because of its structural design, elevation, or other considerations. As a result, the homeowner's rates may be much lower because granular data allows Kin to balance risk and profitability better.
2. The Internet of Things (IoT) is allowing for real-time risk profiling.
Now that technologies have the capability to inter-communicate automatically via the IoT, some insurance companies are offering real-time risk profiling. That is, they're tracking essential data points and applying the incoming data immediately to gain a truer picture of how to assess and manage risk for each customer.
This type of IoT use is particularly prevalent in both personal and commercial vehicle insurance. Take telematics, for instance. Many big-name companies have made it possible for telematics devices to be installed in drivers' vehicles. These kinds of devices rely on a cloud-based IoT interface to send insights back to a database constantly. As a result, drivers who practice safer driving habits may be rewarded with lower premiums or other monetary perks.
Telematics isn't just for the personal auto insurance world, though. It's making headway into the industrial vehicle insurance marketplace as well. As explained by Trackunit, fleet managers who want to pay less and save their companies are installing telematics units into their fleets. With the telemetrics data, they can get a better understanding of how to train their drivers, reduce the likelihood of accidents, and work with their insurance providers to minimize their rates.
3. Digital tools are unclogging the claims funnel.
Insurance claims have traditionally been a frustrating and arduous experience for customers. Another recent Accenture survey revealed that 31% of individuals felt the claims process was unsatisfactory. From slow responses to settlement difficulties, global consumer complaints have prompted a new era of AI-powered claims submissions, primarily in the home and automotive insurance sectors.
With AI, claims bottlenecks can be avoided. In a recent post, Ricoh explains that AI can help lessen claim-related pain points by conducting rapid triage of claims data. Plus, AI can collect all the parts of a claim into a single folder, eliminating the need for human intervention. Even photographs can be scanned and interpreted by AI software, taking a huge and tedious responsibility off the plates of claims representatives.
It's not impossible for AI to determine the validity of a claim, either. Again, this helps streamline the overall claims process and may shorten the time it takes to reach a resolution.
Moving ahead, insurance providers are apt to find other ways to update their industry through the application of technological solutions, systems, and strategies. As they do, they'll help make all types of insurance more economical, convenient, and appealing for customers.
