At this point in history, the digital revolution has turned nearly every industry upside-down in one way or another. The disruptions are clearly visible in industries like retail, where the rise of eCommerce has changed everything, and in media, where nearly every outlet has been challenged and disrupted by digitisation, says Mark Broadly, a Journalism Major and Spanish Minor at NYU.
But what about the insurance industry? Today’s insurance market might not seem profoundly different from that of ten years ago to the lay consumer, aside from some big and well-known changes in health insurance.
But behind the scenes, big changes related to digitisation are shaping the insurance industry of the future. In this article, we’ll talk about five of the biggest digital insurance trends and how they’re creating a new mentality for this vital industry.
- Buying Online
It’s never been easier to buy insurance online. Nearly every insurance company now offers free online quotes, and consumers can buy many types of insurance products completely online, without ever seeing an agent in person or even talking to someone on the phone.
It’s never been easier for a policy buyer to find a policy customised to their needs and available with the click of a button (although this raises the important question of how to ensure that tomorrow’s insurance customers understand the real and important legal arrangement into which they’re entering).
- The Internet of Things
The interconnected global web of digitally enabled devices collectively known as the Internet of Things is driving some of the insurance industry’s most prominent initiatives. Suddenly, insurance companies have access to a treasure trove of real-time information from every area of policyholders’ lives, and they’re using it to create new opportunities and innovations in the insurance sector.
For several years, some health insurance companies have offered discounts for policyholders who use a personal fitness tracker such as a Fitbit to document their progress toward their health and wellness goals. Now other insurance sectors are following suit, with auto insurance companies offering discounts to drivers who install sensors in their cars that allow insurance companies to monitor their driving.
That level of personalisation is new to the world of insurance, and it will take some getting used to, especially until privacy concerns are ironed out. But, thanks to a new generation of technologies, insurance customers have opportunities to save in ways previously never thought possible.
- Big Data
Calculating risk is the bedrock of the insurance industry. When data gets more accurate and more comprehensive, risk calculations are easier and more precise, which means that the advent of Big Data is creating a revolution in risk assessment.
Underwriters now have more data than ever available when making decisions about whom to insure. From the structural integrity of homes to driver accident rates, to the ways that complex medical conditions interact, it’s now possible to detect patterns previously never known, through the power of algorithms. (And insurance companies’ data get even better and more useful when they collect it from IoT initiatives like the ones described above.)
Of course, Big Data can also mean big concerns when it comes to privacy and individual rights. Underwriters must keep in mind that insurance is designed to spread risk across a large population, not to insure a nonexistent risk-free individual, and they should take care to use the greatest sensitivity in dealing with individuals’ most personal lifestyle data.
The 21st-century insurance market is all about doing more with less, and AI chatbots are a prime example of the innovative ways that insurance companies are maximising their resources through technology.
Chatbots are AI programs that use digitally generated responses to frequently asked questions, making it easy for policyholders to get questions answered 24/7 and providing quick answers when they’re needed most.
Chatbots enable insurance companies to allocate labour more efficiently by reducing the amount of time that customer support personnel spend answering simple questions. They also help insurance companies join the always-on world of commerce today, where customers won’t accept waiting for an office to open to get their questions answered. Finally, chatbots also offer an incredible tool for helping policyholders navigate products and services that can be intimidatingly complex.
In some cases, AI can even be used to handle claims, as the U.K. insurance startup Tractable has demonstrated. Tractable’s groundbreaking technology enables simple claims to be processed by AI and settled in a much shorter time frame. Those time savings could add up to substantially increased productivity in claims processing and a much smoother and more human-friendly user experience.
- Insurance on Demand
Today’s business environment includes more freelancers and contractors than ever, working in a much greater variety of fields. Professional insurance is just as important for these contractors as it is for any professional, but it can be more difficult and time-consuming for them to obtain affordable PI policies.
That’s why insurance-on-demand startups like Dinghy have flourished in the 21st-century marketplace. Dinghy allows contractors and freelancers to purchase policies when and where they need them through an app that makes the process simple and secure. Increasingly, that appears to be the name of the game in the 21st-century insurance, fast, frictionless, on-demand, and tailored to the needs of the individual policy buyer.
With technology and society shifting rapidly in unexpected directions, insurance professionals have a lot on their plates when it comes to navigating our brave new digital world.
However, for those who can make smart decisions and harness the energy of innovation, the incredible new tech emerging from today’s insurance industry is sure to write a fascinating story for the insurance market of tomorrow and to create new possibilities for keeping people safe, protected, and productive.
The author is Mark Broadly , journalism major and spanish minor at NYU .
About the Author:
Mark Broadly is a Journalism Major and Spanish Minor at NYU. After graduation, he plans to seek a career as a writer and eventually publish his own novel. In his spare time, he loves freelance blogging, hip-hop dance, fashion, and exploring NYC.