The Power of Tech: How The Insurance Industry is Changing
Insurance professionals know one of the most effective ways to sell insurance is by forming genuine connections with people and anticipating their unique needs. For a long time, insurance professionals operated with a traditional approach that focused on people but did not focus on adopting new technology to maximize efficiency and reduce costs.
In recent years, more insurance professionals have seen the positive effects of adopting and using new technology in their businesses.
The rise of insurtech has helped fill the gap between what traditional insurance organizations are doing and the fast-moving tech revolution that the industry is going through.
But how is technology changing the industry for the better?
New Technology Radically Changing the Insurance Industry
It’s more than just moving files to the cloud and sending out automated emails. Below we look at what tools the major players in the insurance industry are using and how they are reshaping the industry.
Big Data and Analytics
Insurance companies deal with lots of data. The rise of data analytics brings the opportunity to utilize this data in several ways:
- Risk assessment: Data is used to assess risk more accurately, which can lead to lower premiums for good risks and vice versa.
- Product development: Data is used to develop new products that meet the needs of specific customers. For example, insurers are using data to develop telematics-based insurance products that track driving behaviour and offer discounts to drivers.
- Customer engagement: Data is used to improve customer engagement, by providing personalized services and recommendations.
Artificial intelligence (AI) has already had a significant impact on different areas of the insurance industry, including:
- Marketing and advertising: Generative AI is making it easier for insurance professionals to optimize their marketing activities. Digital marketing AI tools also help track ad performance and manage online presence.
- Customer retention: AI technology can help insurers and brokers provide more personalized customer service by analyzing user behaviour, predicting turnover risk, and recommending personalized products. AI-powered chatbots can also significantly improve customer service.
- Fraud detection: Many insurance organizations are utilizing AI technology to detect fraudulent claims. Using machine learning to analyze large amounts of data enables insurers to identify patterns indicative of fraud.
Blockchain is a distributed ledger technology that allows for secure, transparent, efficient, and tamper-proof transactions. Below are some examples of how blockchain technology is used in the insurance industry.
- Blockchain-based insurance platforms: There are several blockchain-based insurance platforms that are currently in development, or have already been launched by insurtech companies, including Lemonade, Guardtime, Insurwave, Blocksure, and more.
- Smart contracts: Smart contracts are self-executing contracts that are stored on a blockchain. They can be used to automate payments based on predefined conditions, which can streamline the claims process and reduce fraud.
- Peer-to-peer insurance: Peer-to-peer insurance is a new model of insurance where individuals pool their resources together to cover each other’s losses. This type of insurance can be a more affordable and efficient way to obtain insurance, especially for small businesses and individuals.
Internet of Things
The Internet of Things (IoT) is creating new opportunities for insurers to create digital ecosystems and improve their products and services. IoT devices can collect data about customers’ behaviour and their environment, which can be used to assess risk more accurately, provide personalized products and services, and streamline the claims process.
How to Approach Challenges and Opportunities in the Insurtech Space
Adopting new technologies often comes with challenges in any industry, including the insurtech space. There are several reasons insurers and brokerages may be reluctant to adopt new technologies, including outdated systems, budget constraints, and the technological skill gap.
Overall, there are two contributing factors that can determine the future success of insurers and brokerages when adopting new technology. Firstly, the ability for that technology to integrate seamlessly with their current systems. Secondly, to have the successful adoption of these tools by the employees and leadership teams. Either way, having a change management leader or champion that can assist in the selection and adoption of new technology is highly recommended.
Trufla is an insurtech market leader, providing data-driven and AI-powered digital solutions to brokerages to improve retention, streamline operations, reduce costs, and more.
If you are looking to take the first step towards technology adoption for your brokerage, we are just a click away. Contact us today.