Published On: Tue, Sep 11th, 2018

How Technology is Changing the Insurance Industry

It doesn’t matter if you looking for an auto insurance policy or a homeowner’s policy, the simple fact is that technological advancements have made their mark on the industry. While it is an open question whether these changes have altered the industry for the best, the reality is there is no going back.

Technology is Changing the Insurance Industry

In fact, many of the changes have made it easier than ever before to shop for quotes, contact customer service, or even follow the status of a claim and that’s just on the customer-facing side of the industry.

The introduction of new technologies such as artificial intelligenceand blockchain are also changing underwriting and reinsurance both of which are helping to improve operational efficiency. With that in mind, here are some of the ways technology is changing the insurance industry.

Websites – the New Insurance Office

Think about it, when is the last time you walked into the office of your insurance agent? Odds are it wasn’t in this decade; in fact, it mightn’t have even been in this century. This is largely because most consumers – even businesses – prefer to sign up for insurance online as compared to over the phone or in the office.

Beyond this, insurance companies need to have a website that is easy to navigate and allows a prospective policyholder to request a quote or to renew their policy without too much hassle. In fact, many companies are even setting up customized websites for the top performing brokers and agents as this allows the personalized touch while standardizing the user experience.

Going Mobile

While just about every insurance company has a customer-facing mobile app, you might also be surprised to know that they are quickly deploying mobile tools for their origination, underwriting, and claims departments as well. These tools are reducing costs by bringing down the time it takes to write new contracts and process claims.

As going mobile becomes a key part of an insurance company’s digital transformation, the  change has added transparency to operations and by extension has made it easier for reinsurers and other players in the secondary market to assess risk within insurer’s policy portfolios.

Artificial Intelligence

While the press might focus on the perceived threats to job security from the rise of artificial intelligence (AI), the reality is that most carriers are deploying this technology to augment the work done by their teams.

For example, AI systems have been used for years to assist in assessing risk and in assuring compliance. However, the systems have evolved to the point where they are also getting involved in decisions related to claims processing as well as customer service. The move to these forward-facing functions highlight the evolution of AI in the insurance industry and point to the future of the technology.

However, the use of AI is not a threat to the employment in the industry; instead, it points to the need for shifting skills sets to work with these systems in an effective manner. This includes the need for data scientists and behavioral sociologists – the latter will be critical in helping AI systems to interact with customers in a less ‘machine-like’ manner.

Blockchain

This nascent technology has the potential to completely disrupt how the entire industry functions. Not only does the move towards a distributed ledger open up the possibility of aggregating risk but the introduction of smart contracts has the potential to remake the industry through the use of ‘micro-insurance’.

These policies could either be tied to machine-to-machine (M2M) payments or even small transaction or for low-income policyholders. In addition, use of the blockchain could change how reinsurance functions.

A centuries-old way to mitigate risk by selling a portion of a policy or a portfolio to a reinsurance company, using blockchain could open the opportunity to individual investors to buy portions of these contracts. Granted, these investments are not without risk for investors but the access to new pools of investors could allow insurers to expand their policy books.

Getting Social

Let’s face it, social media has transformed our lives – not just how we communicate but how we access information. In terms of insurance, the rise of social media has changed the way companies connect with policyholders.

It doesn’t matter if one prefers to use Facebook or Twitter, social media is being used to update holders on changes in policies, special promotions, or even for important deadlines, such as open enrollment periods for health insurance.Not to be overlooked is the role which social media plays in marketing insurance. Not only is it a platform for insurance companies communicate with customers it has also become a way for customers to share their experiences – good and bad – with the world.

Not only has technology helped to transform the industry, its continuous march is poised to completely reinvent how we will approach insurance in the future.