InsurTech: how tech is changing the insurance industry
Tech’s got it covered
Insurance. It may not be sexy, but it sure gets about. Almost everyone has at least one form of insurance.
Unsurprisingly, this is reflected in the state of the industry as a whole. According to MarketRealist, the US insurance industry is the largest in the world. Since 2011, the annual revenue of insurance premiums exceeded $1.2 trillion.
Historically, the wealth of the industry has not translated to bigger budgets for innovation. Up until recently, the insurance industry has been slow to embrace new tech. Research and advisory firm, Forrester, advised in 2015 that insurance firms must embrace digital disruption, or risk being left behind.
Luckily for insurers, they’ve managed to think fast. Keep reading to find out five ways InsurTech is shaping up the insurance sector.
AI triage system
Anyone who’s ever made a claim on their insurance will know it can be a long-winded process.
While most claims handlers make the process as painless as possible, there’s a certain amount of questions they simply have to ask. It can be time-consuming, to say the least.
Now, insurers are starting to use AI to automate some of the claims-handling processes. Straightforward claims can be handled by an AI process, with more complex claims escalated quickly to human claims handlers. This will reduce claim times, and is much more cost-effective for insurers. This, in turn, can help push down insurance premiums.
In fact, since machine learning software has the ability to pick up subtle patterns in data, experts predict it may be more effective than humans when it comes to identifying insurance fraud.
Ageas is the first UK insurer to roll out AI in its claims handling process, but we reckon this will become the norm over the next couple of years. Watch this space.
As wildly futuristic as it may seem, we’re actually just a few short years from driverless cars becoming the norm.
According to Sven Raeymaekers, of tech investment banker GP Bullhound, “the majority of car manufacturers estimate the first highly to fully automated vehicles [AVs] will hit the market between 2020-2025”.
As the way we drive is completely reinvented, this will have a knock-on effect on the way we insure our cars. If nobody is ‘driving’, who’s liable for any accidents that might occur? Are self-driving cars truly safe enough to dominate our roads?
Some experts think so. This article by Jennifer Fitzgerald for TechCrunch suggests that car insurance premiums could drop by as much as 60% over the next 15 years. They believe that the majority of car accidents are caused by human error – without humans controlling our cars, they believe our roads will be much safer places.
Did you know that the UK has more insurance claims relating to whiplash than anywhere else in Europe? In the UK, 78% of low-value motor personal injury claims are for whiplash, compared to 48% throughout the rest of Europe. A whiplash claim is made, on average, once every minute in the UK.
This wouldn’t be a problem, except many of these claims are fraudulent. Check out the following from the Huffington Post:
“According to a recent survey of the general public by AXA Insurance, 2% of respondents openly admitted to filing a fraudulent or exaggerated whiplash claim, and 11% knew someone who had done the same. Two out of every 100 Britons, not just those who had been in an accident – or even necessarily motorists – openly admitted to gaming the system by filing whiplash claims they knew to be false.”
These fraudulent insurance claims cost insurers millions, in turn raising premiums for the consumer. Luckily, tech has a way to solve it.
What people don’t know is that only very specific types of car accidents are physically able to cause whiplash. New sensors being placed in cars are able to accurately tell whether an accident was able to cause whiplash. The data from these sensors is then analysed by Telematics firm, Octo, to decipher whether a whiplash claim is even possible.
If it saves us money on our car insurance, we’re happy with that!
Health insurance and wearables
For those devoted to being their best selves, wearable tech is a great way of monitoring and maintaining fitness. It allows you track things like heart-rate, sleep health, activity levels, stress, and even what you’re consuming. The data collected by wearables can provide a very detailed picture of someone’s overall health – which is why health insurance providers are starting to encourage this wearable trend.
Healthy habits, such as exercising regularly and managing stress, can be rewarded with lower insurance premiums, since you’re less likely to become sick and subsequently claim on your insurance. With the ability to feed data to insurers in real-time, the opportunity for fraud is low too.
For some, this can seem a little intrusive and ‘big brother’. They don’t want their health insurance provider to know about their cheeseburger habit, thank you very much. However, for those who are already tracking every meal and exhale, they might as well benefit from it.
Several US health insurance providers have already started utilising wearable tech among their customers. AXA offers customers who walk over 10,000 steps a day a $100 discount on their insurance, with many others offering similar schemes.
Data breach insurance
As the Internet of Things continues to grow, our lives are becoming increasingly connected. While this – on the whole – is considered a positive, it comes with its own risks. With all that data whizzing around our ears, it’s only inevitable that a breach occurs occasionally.
At the start of the year, market research firm Forrester predicted that 500,000 IOT devices would suffer a breach in 2017. While there’s no word yet on how that prediction panned out, this is a serious claim. Especially when you consider that the average cost of a data breach to a business is now over $7 million each.
While data breach insurance is available to help mitigate this risk for tech businesses, it is still a new product and has not yet fully taken off. Many businesses still don’t understand the risks, let alone the insurance. According to research from Business Insider, adoption rates for data breach insurance are low. For example, just 5% of business in the manufacturing industry have data breach insurance.
While an understanding of data breach insurance will grow, this will be tied – unfortunately – to an increase in risk. Business Insider estimates that annual cyber insurance premiums will more than double over the next four years, growing from to ~$8 billion in 2020.
With the potential decrease in car insurance premiums through self-driving cars, perhaps it will all balance out?!
With tech at its disposal, it’s only a matter of time that insurance shakes off its ‘fuddy-duddy’ image in favour of something a bit shinier. Not only are large insurance agencies seeking to
Not only are large insurance agencies seeking to innovate their processes, but new startups are also making waves in their insurance space. Perhaps techies like SPIXII – who won the 01/10/100 Pitch-Off at London Tech Week 2017 – will help cement insurance’s image as an industry that innovates?
Are you innovating in insurance? We’d love to hear from you.