Insurance Technology: seven Disruptive Ideas to Convert Traditional Insurance Company

Insurance Technology: seven Disruptive Ideas to Convert Traditional Insurance Company

Have you ever attempted to check your insurance claim status? It often requires several calls, some emails, or even visiting an agent to get claim status details. Lack of web presence equals lower customer satisfaction. Today, almost sixty one percent of customers choose to monitor their application status with digital devices.

While some insurance carriers have made significant modifications courtesy of disruptive digitalization (we’ve already discussed this topic in our whitepaper), most companies trail behind. And the chasm inbetween modern insurtech agencies and traditional ones is deepening. Disruption caused by Haven Life is a prime example. The company diminished time to process applications from what was usually 1-2 weeks to twenty minutes via their website’s online questionnaire.

In 2016, insurers spent almost $187.Trio billion on IT, accounting for 25.7 percent of the entire of financial services spending. The total, nevertheless, is still fairly low with legacy system complexity only slowing innovation. According to McKinsey, nine out of ten insurance companies identified legacy software and infrastructure as barriers for digitalization. As a result, the large industry – which in the US accounts for $1.Two trillion – needs to urgently switch the ways of business development. It’s clear that the make-insurance-great-again mission powerfully depends today on technology adoption.

Mike de Waal, president and founder of Global IQX, says:

Modernization of core legacy systems, fresh insurance exchanges and switching business models (platform and peer-to-peer) defined the year. They will proceed to do so as carriers adopt digital strategies… Bouncing the onslaught of fresh innovation and understanding how it can be used to create a competitive edge–very quickly–can be disconcerting. However, these disruptive compels should be seen as the catalyst necessary for the kind of dramatic switch required to spur growth and fresh insurance products.”

Vertical players look for a brief pass to the digital age. Some companies make internal switches by backing insurtech startups or establishing innovative labs, while the rest are only hesitating. What kind of switches should be made in the very first place? These are the main problems to address:

1. Internal processes of insurance companies are often too complicated. There are so many duplicating business operations that almost one million insurance jobs in the US alone can be automated. McKinsey claims that automation and digitalization define the main potential of the industry. This means you can cut costs by about forty percent by automating up to thirty percent of operations.

Two. Insurants are not sated with their service providers. The latest studies of Morgan Stanley and BCG claim that insurance companies tend to provide poor customer practice. About sixty percent of insurance clients worldwide aren’t sated with their service providers and almost fifty percent of insurance clients consider turning to newer models.

Trio. Youthfull prodigies choose to join technology, consulting, or other financial companies rather than insurance. According to Accenture, only two percent of US university alumni plan to come in the industry. As a result, companies frequently don’t have enough technically-skilled employees to go after switches let alone drive them.

These are the problems. How to treatment them? Let’s discuss seven opportunities that will lead the transformation from traditional insurance agency to innovative insurtech rock hard.

Personalization Trend Will Rock Insurance Pricing and Risks Assessment

The old-fashioned style of risk assessment is to rely on impersonalized datasets. But today, endpoint devices and social media can provide large amounts of more individual data. The treatment can help both insurers and customers – consumers get cheaper or better coverage and very personalized services, while a business gets more accurate risk assessment, stable margins, and pleased clients. The latest Morgan Stanley and BCG examine demonstrates that such a model is viable–customers are ready to share individual data to get cheaper risk coverage.

An underwriter can consider a broad range of very personalized records. Connected devices and wearables provide deep insights into the customer’s physical condition, like blood pressure, temperature, pulse. Now, the insurer can even explore the client’s lifestyle patterns, such as the number of steps per day, or how often and how long it takes someone to brush their teeth. Social media data from Facebook, Twitter, or other networks also could be useful. It discloses customer risk tolerance with the application of machine learning or other predictive analytics mechanisms. In addition, all this data Is available in real time, which provides extra value for insurance companies.

UK telecommunication company O2 has already employed this personalized treatment. It launched a special car insurance product based on the idea that the safer you drive the better price you get. Driving habits are tracked by a special device and scored by a mobile app after each journey. The O2 app also assists by providing tips on improving your driving for risk mitigation.

Slat is another relevant example. The company uses IoT technology to suggest dental insurance. A brainy toothbrush tracks how well customers take care of their teeth. Then the company provides a personalized insurance plan based on teeth-brushing data. The hard claims that it can suggest up to twenty five percent lower rates compared to competitors.

Chatbots Substitute Insurance Agents and Brokers

Each year insurance agents spend thousands of hours supporting customers in the decision-making process, providing standard on-demand information or reports. Chatbots, reporting devices, mobile technologies, and voice recognition algorithms can lightly automate these tedious operations. Chatbots can perform as effectively as a large customer care center and drastically cut costs in customer support and sales.

Some US insurance carriers are already armed with such technologies. In Canada, Ontario-based Excalibur Insurance has employed AI bots to automate their client interaction. Not only is the insurer available 24/7 via a website or Facebook, but the system also engages fresh clients, deals with claim reports, and service requests. It’s a good alternative to phone calls as seventy percent of callers dangle up while waiting for customer care to react. Also, clever systems can send renewal notifications, assign tasks to agents, and build warm relationships by sending friendly greetings and special offerings to clients keeping them engaged.

Insurance Workflow Automation – One More Step toward the Digital Age

Paperwork, by hand written notifications, follow-ups, and underwriting are usually boring to do. Automation permits companies to reduce cost that is spent on routine work and refocus some full-time employees to more creative tasks. A persuasive example of cost-cutting is the automation of payout calculation at Fukoku Mutual Life Insurance. The company substituted thirty four employees by AI and now expects to boost productivity by thirty percent after accomplish system integration. It’s estimated that the rock hard will save about $1.25 million in the very first year of AI use.

Mitchell Acute, Marketing Associate with Insurance Shop, says:

“The Insurance Shop went through a workflow review of our own processes and are working on implementing a workflow automation process that we estimate will improve efficiency by forty percent – that’s dramatic and will give our customer service department more time to concentrate on our client’s real needs and less processing work.”

The other side of the problem is inbound correspondence and documentation. Every day all financial institutions process and gather thousands of files in paper archives. That’s not the best way to store, process, and exchange information. It doesn’t contribute to saving the environment either.

If files are digitalized, analyzed, and stored in a cloud, documents can be automatically reviewed and rejected in the case of inconsistent information or errors, which permits insurance staff to deal only with consistent and correct information.

The customer data that has been collecting dust in paper archives for decades is no longer an expenditure item in a profit-and-loss statement. If you apply picture and text recognition algorithms, these become valuable assets that tell an insightful story about your customers.

How Blockchain Disrupts Reinsurance Operations

Blockchain implementation is a $5-10 billion cost-saving chance for reinsurers worldwide, according to PWC. The nature of reinsurance is close to chain structure. No wonder it is recognized as the 2nd largest distributed ledger use case in fintech after payments. The major benefits for stakeholders are reduction of verification and validation time, elimination of errors and minimization of reputational risks. By using blockchain, a reinsurer won’t have to interact with the insurer to get data provided by client. For example, you need to verify several insured events for one health risk reinsurance contract. If all parties are connected by brainy contracts, the reinsurer will be able to get direct access to an insurant’s health data.

Another sound idea is the prevention of reinsurer’s loss access. The key problem here is the loss variability at different stages of claim treating due to complicated documentation processing. Blockchain solves the issue by recording the loss estimates history for each contract. It enables better liability tracking and difference solving.

Redefining Traditional Ways of Insurance Claims Treating

Ask yourself how long it takes for your agency to make claim decisions. There are lots of issues with a multitude of scope: a cracked finger, a big car accident, the fire in a luxury villa, or a significant agrarian claim from a large corporate client. Assume that their US land bank was affected by drought. There are thousands of acres across the country sown with crops. How long would it take for employees to gather and process all data required for payout decision-making? There’s a good way to cut costs for such projects by employing AI. Machine-learning-based systems can calculate detriment using satellite pictures or drones to explore fields. It will eliminate the human factor and significantly cut time and cost.

Claim reporting is also switched by a combination of machine learning and mobile technologies. State Farm arms clients with a Pocket Agent app. A customer can send the vehicle picture and the claim will be submitted without wasting time on dealing with paper documents or large web forms.

Software Solutions Bring Insurance Fraud Detection to the Fresh Level

Fraud is a good calamity of the insurance industry. According to Coalition Against Insurance Fraud, US carriers lose at least $80 billion annually. On average, it accounts for 5-10 percent of claims costs for North American insurance companies. Cloud and mobile technologies can support insurance agents with real-time information to deal with duplicate claims, inflated claims, fake diagnoses, fake dependent family members, mutually special diagnoses, insurant data inconsistency, overpayments, and internal employee scams. For example, a client claims payout for a lost right eye twice or attempts to recover from the same property fire by counterfeit documents with a switched date. The system will compare the claim data with the database and identify the fraud. This will reduce cost by enhancing operational speed, delivering higher accuracy, and removing the influence of an interested party.

Reshaping the Insurance Product Distribution

Long gone are the days when clients had to call or visit the insurance agent to get a policy. The web made people more aware of offerings on the market and today anybody can lightly compare products, review testimonials, or find special plans that match individual requirements. Insurance shopping platforms like Insurify or Friendsurance are actively redefining distribution models. While clients can get more specific about what they are looking for, service providers build up more visibility if they obey with request. These marketplaces help insurers cut distribution cost and, at the same time, bring in even more well-targeted leads.

The largest switch that we see is how mobile is switching comparison shopping. Pet insurance marketplaces are becoming more and more popular. This trend will force providers to create online quoting, servicing and APIs, so they can reach and serve this fresh audience.”

What Should the Insurance Industry Expect?

Digital technologies bring several disruptive trends to the insurance business such as personalization, the shift to a platform economy, automation, and real time-based estimates rather than historical ones. What are the features with the most influence?

1. Cost cutting. A digital insurer gets strong competitive advantages over the traditional carriers. According to BCG, the disruptive technology switch permits for cutting up to ten percent in premium costs and eight percent in claims expenses. The turn to the web platform ecosystem permits for cutting distribution cost and reaching better communication with customers by social media, emails, mobile apps, etc.

Two. More accurate risk assessment. The digital business model enables better risk assessment and sometimes even aids in preventing insured events when it comes to driving assistance or health and lifestyle monitoring.

Three. Better customer practice. The use of mobile apps and social networks integration enables better understanding of a customer and ensures 24/7 availability.

Four. Budge from reactive to proactive decision-making. Insurance is a data-driven business that ought to consider numerous factors about customers and strongly rely on statistics. However, the industry still leverages historical rather than real-time data. Various wearables and sensors are yet to reach their potential of data streaming and hyper-personalization.

Five. Expanding portfolio. The broad range of data records permits insurance carriers to cover very specific risks and work with fresh micro-segments. It also reconsiders the nature of incurrence products (e.g. bring them to a pay-per-use basis).

6. Insurers become more insulated from scams. APIs and mobile shorten the time it takes for fraud detection and makes the assessment process more rigorous.


The industry has a strong request for technology talents and needs support or partnership in the innovative process. Mobile and ubiquitous automation have already become the reality of insurance. Here are the points to consider about enterprise mobility that we covered before. AI, IoT, blockchain, and wearables are emerging technology trends of the near future, which should be monitored to stay ahead of the competition.

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