As technology continues to play a central role in many industries, the insurance world is no exception. With the need to engage a younger customer base who have been raised on smart technology and access to information at the touch of a button, digitization is now underway to transform insurance practices making the claims process easier and more efficient.
Technology is also transforming the role of insurance from one of protection against risk towards the prevention of risk through predictive analytics. This article will further explore some of the ways in which a technology approach to insurance is being adopted.
Predictive Analytics
Predictive analytics allows insurers to use a variety of data to understand and predict future events, customer behavior, and other factors that could potentially affect the outcome of a claim.
Through predictive analytics, insurers are able to use historical data to build mathematical models to identify trends which are used to predict future events. Informed decisions can then be made to mitigate risks and to ensure optimal outcomes. According to a 2018 study by Valen Analytics companies that used predictive analytics and modeling were able to improve their loss ratios by 3% to 9% as compared to those that didn’t.
Technology is essential in the predictive analytics process and a wide variety of methods such as machine learning, AI, data mining and predictive modeling are employed to produce insights about the future allowing risks to be identified and factored into the underwriting process.
Claims Processing
The claims process is one of the areas that are in the process of being transformed thanks to digitization.
Insurers such as Lemonade, a digital insurance company, are already using algorithms and digitization to make their claims process much faster and user friendly. They state they are able to process a claim instantly through a bot or personally review it through a member of their team if the claim is not instantly approved.
As AI and machine learning continue to automate the claims process and eliminate the need for human intervention, insurers can improve their turnaround times for handling claims, as well as produce more accurate assessments, transforming the entire underwriting process.
Customer Demand
When it comes to mobile apps, electronic payments or ordering a pizza the user experience is seamless and the objective is accomplished within a few seconds.
Although insurance companies such as My Choice can give you a quote at the click of a button, other insurance processes such as filing a claim can be cumbersome and time-consuming. The insurance industry needs to adopt technologies to digitize many of its processes to meet customer expectations in this digital age and to stay ahead of the competition.
Ease-of-use is one of the main drivers influencing customer decision-making when it comes to insurance. Customers expect their interaction and experiences with service providers to be simple, reliable, efficient and as fast as possible. In this respect, the insurance industry has fallen short and is lagging compared to other industries, and service providers need to provide their customers with a seamless and fast digital experience.
Technological innovation continues to become essential for acquiring and retaining customers and the insurance industry is taking notice. As this article has highlighted, the future of the insurance industry is undergoing a technological transformation; one that will no doubt benefit the industry as well as those it serves.
