Especially technology. Insurance businesses wait for other industries and companies to try out something before they jumpt in. They need to manage risk, which is an asset when they’re dealing with policyholder premiums. In the past, this has prevented them from making expensive mistakes, but it has also cost them profitable opportunities.
The world is changing, and policyholders demand more from their insurance providers.
Thankfully, insurtech is changing the way insurance companies and brokers do business. Specifically, they’re starting to realize the benefits of upgrading legacy systems. The latest technology can enable insurance businesses to be more proactive in seeking out missed opportunities, and it can help them to more actively engage with their policyholders (instead of waiting for them to complain or worse — leave).
Here are three basic ways technology is reshaping the insurance industry:
1. Data Analytics
Data analysts can now gather customer information from a variety of sources, such as:
- Social media
- Smart phones
- Website analytics
- Telematics devices
- CCTV footage
- Credit reports
- Electoral rolls
- Government statistics
- Weather reports
- Vehicle sensors
They’re able to leverage this data, in combination with existing underwriting techniques, to more accurately price risk. This, combined with real-time data from satellites and other sources, can help insurance businesses create customized solutions for their policyholders.
In the old days of selling insurance, agents were very much an integrated member of the local community. They knew most of the policyholders personally, and also knew the consequences of selling an auto policy to the local town drunk or a health insurance policy to someone with chronic health problems.
Today, insurance agents are often removed from the community or the community is too large to allow for the kind of relationships of yesteryear. However, by using data analytics, insurance agents can again gain access to the valuable information that comes from forming personal relationships, and use that data to provide better coverage for their clients.
Data collection has become so sophisticated that insurance business can now gain access to vehicle sensor information, satellite information, the policyholder’s zip code, the driving history of the policyholder, and even information gathered from social media. All this useful information can then be used to build an accurate model of how risky each person is to insure for an automobile policy or any other policy the customer may need.
2. Connected Devices
Connected devices are electronic devices typically connected to other devices or networks via wireless connections. They enable real-time transfer of data and can be extremely useful for insurance businesses.
Especially, if an insurance business wants to become more proactive.
Connected devices are already being used by insurance companies for a variety of reasons. The main reason being to be more proactive by shortening the claims processing process. Many insurance businesses currently wait for a policyholder to call in with a claim. But, some insurers are stepping up their game and using connected devices to get ahead.
For example, an insurance business might use connected devices such as a fire alarm sensor app on a policyholder’s phone. If there’s a house fire, the app helps policyholders alert the authorities immediately. It can also be used to initiate the claims process with the insurance business.
This gets the process moving faster, but it can also reduce claims costs. Why? Because these apps are more proactive. Instead of waiting for a fire to engulf the entire house, the app contacts authorities immediately so the fire can be put out faster, resulting in less damage to the house.
For the insurance business’ part, processing a claim (and getting the insured party their money) quickly can reduce the risk of the policyholder suing the insurer for delayed processing or for adjusting the claim improperly.
3. Automated Workflow Management
Automated workflows are yet another way insurance businesses can ditch the habit of being reactive, and start being proactive about managing their operations.
That’s because automated workflows reduce the tediousness of filling out applications and filing paperwork. The underwriting process is notoriously slow in the insurance businesses, and one of the major reasons for this is because of the sheer amount of paperwork that needs to be processed.
If the underwriter can automate workflows, then the all-too-common time to policy issue can be reduced.
For the insurance agent’s part, an automated workflow means he or she can focus more on client acquisition instead of tedious pen-pushing. Without automated workflows, insurance agents find themselves spending hours upon hours on manual paperwork. This includes filling in endless applications and policy forms with customers’ personal information. With automated workflows, insurance agents can completely rid themselves of all the extra work because applications are filed electronically, meaning the agent can take the application over the phone and submit everything directly to new business or even directly to the underwriter for processing.
And since paper insurance applications tend to have a lot of duplicate content built into them (for example, multiple signatures required, multiple personal information inputs like name and address, multiple dates, etc.), the online application is a godsend which streamlines this process by autofilling the necessary fields and reducing or eliminating duplication requirements. With the hours of work it saves, it’s truly a wonder how this technology hasn’t yet been adopted across the board.
Technology shouldn’t be something that is feared in the insurance industry. Some businesses still seem reluctant, but eventually the entire industry will make the change because consumers demand it.
Rather than fear legacy upgrades, insurance businesses should embrace them. The latest insurtech has the ability to transform the day to day operations and the overall performance of insurance companies, brokerages and agencies. Whether it be through leveraging data analytics, utilizing connected devices for increased insight on customer risk, or through management platforms that enable automated workflows, insurtech can make a significant impact. Not only will new technology make running an insurance business cheaper, it’ll make pricing more accurate, leading to more competitive products and of course, happier customers.
Roi Agababa is CEO of Novidea
Image Credit: Bergserg/ Shutterstock