How the insurance industry is embracing the digital revolution
When you think of fast, innovative industries, insurance is probably not anyone’s first choice. But technology marches on waiting for no one, and insurance companies are facing the reality of “adapt or die.” Faster insurtech startups as well as increasing customer demand for flexibility and responsiveness means that insurance companies cannot stick with hidebound methods but must quickly adapt new technologies and solutions. However, sometimes those new ways create new problems of their own.
All of this means that companies must understand how insurance is going digital, what the most technologies, as well as challenges that appear as a result. Here are just a few of the most important things to consider.
Speed, Speed, Speed
Think about how long the traditional approach of dealing with an auto accident takes. You must go through your glovebox or wallet to fish out a card which is months old. Then you must go through an insurance agency, and it will often take weeks if not months for the company to entirely process your claim.
Now that is no longer good enough, as customers want excellent, yet fast service or they will go to competitors who can provide that. Fortunately, technology can do just that. The self-service dashboard means that customers can do things quickly as possible and get in touch with their insurance companies with the push of an app button. No more waiting around for a call service representative to eventually get in contact with you.
Internet of Things
We hear about Big Data all the time, but the question which should be asked is where is this data coming from? The Internet of Things promises to be one of the major hubs where insurance companies can learn about information.
As McKinsey points out, insurance companies have traditionally been forced to rely on factors such as age, one’s credit, or the number of accidents to determine insurance premiums. But there are plenty of terrible drivers who simply get lucky, or good drivers who get unlucky. A networked car would let insurance companies collect real information on a driver’s behavior, making for fairer and possibly reduced premiums.
Outside of auto insurance, the Internet of Things could also let insurers know when items such as tools or phones are being used, and either only insure the item when it is usage or maybe block the item when it is being used in an unsafe matter. There are boundless opportunities for how these devices can be used, and only the creative insurer can find them.
Artificial Intelligence and Machine Learning
There is a slight contradiction between the last two factors. Insurance companies can gather more data than ever before with the Internet of Things, so how are they supposed to be more responsive? The answer is artificial intelligence.
A basic example of how artificial intelligence can improve responsiveness is the increasing prevalence of chatbots. The APP Solutions predicts that in 2020, 80% of businesses will use chatbots. With chatbots, insurers can offer a specialized, instant response to customers that can help them with their needs.
Artificial intelligence can also settle claims faster by processing the data made by any claim and coming to an instant conclusion. In one case, an artificial intelligence processed a claim in just three seconds. Insurers will likely watch over artificial intelligence to make sure that everything looks right, but the result is a faster process with happier customers.
Compare and Pricing
It used to be that people would stick with their insurer not because they thought they were getting the best deal, but out of momentum and inertia. While that still happens today, it is now easier than ever for customers to check and compare prices as well as the complicated minutiae in any insurance agreement.
With the Internet and web research, customers can easily secure quotes, decide, and enroll in a new program in minutes without being overawed by a slick insurance salesman. The result is that insurers must think more carefully about their offered plans. It is not good enough to offer better plans than Geico or Allstate. Now insurance companies are competing with small insurtech companies which many have never heard of until they hopped onto Google for a minute.
The right technology will create a more responsive insurance company that is more attuned to its customers’ needs. But insurers must not forget that these technologies do not exist in a vacuum, but as part of a wider ecosystem which requires institutional knowledge and tech wizardry. Only by combining all these aspects can the industry truly enter a digital revolution with positive consequences for practically everyone.