InsurTech is evolving rapidly. The sector has flourished over the past few years and new trends are always taking centre stage. To stay ahead of the curve, Cloud Insurance has outlined the four high-value trends in InsurTech this year.
AI for Better Products & Customer Experiences
Artificial intelligence (AI) has dominated conversations across the technology world for many years. It is no different in insurance. Firms are already using the technology in a variety of use cases, including personalised products or improved claims experiences.
Cloud insurance feels this technology is only going to become more important in the strive for better products and experiences. With the technology’s ability to quickly analyse customer data from various different sources, such as social media or other cloud-based industries.
Through this, it can offer modified insurance products and services. For example, it can offer them products when someone is getting married, having children or buying a house. It can even suggest policies based on what the person really needs or how much they can afford.
In the post, Cloud Insurance said, “It’s a no-brainer that personalising products will lead to happier customers and increased revenue for businesses, no matter what industry. For example, British outdoor retailer Mountain Warehouse boosted their sales by 10% after introducing advanced personalisation solutions through their website.”
The boons of AI don’t simply reside in improved personalisation. The technology can automate processes like claims and ensure better customer experiences.
Blockchain for Agility and Competitive Advantage
The next impactful trend Cloud Insurance sees in 2022 is the wider use of blockchain.
Much like AI, blockchain has been a buzzword in many industries. While there is still scepticism around its use, firms are becoming more open to its decentralised ledger technology.
A reason it has become more popular is its ability to provide complete transparency. Cloud Insurance believes this will be of particular note for maintaining transparency between insurers, reinsurers, customers and partners. Blockchain also supports greater data security, without needing an intermediary.
By not needing a central authority or third-party, insurers gain more agility and a competitive advantage. For example, insurers might hesitate using AI to automate claims due to security or accuracy concerns. Failing to adopt AI could see them fall behind competitors, Cloud Insurance said. However, those that embrace AI and blockchain technology will be in the best position. It empowers an insurer to use new technology or processes in an incorruptible digital ledger.
Cloud Insurance explained, “By combining AI with blockchain to automate claims management, both the insurer and the claimant will be in the same network. Other ancillary information, such as police reports or dashcam videos, can be added into the network securely and safely.
“This process leads to two key advantages. The first advantage is that it eliminates manual processing for insurers. This saves resources for insurers while making claims processing faster for the consumer. The second advantage is it sets the foundation for predictive analysis to detect fraudulent claims.”
Predictive Analysis to Prevent Losses
Blockchain establishes a foundation for predictive analysis to detect fraudulent claims.
Fraudulent claims have been a big issue for insurers. A report from Mordor Intelligence claimed fraud detected in the UK is estimated to total over €1bn annually, while undetected fraud could cost an excess of €2bn each year. More shocking is the US market, with losses incurred by fraudulent claims is estimated at more than $80bn a year.
Predictive analytics, which analyse current and historical facts to predict future events, can seek patterns in past claims and customer behaviour to predict the probability of fraudulent claims.
Cloud Insurance offered an example. If someone makes multiple small-value claims and suddenly makes a large claim, it could indicate foul play.
It added, “Adding a layer of predictive analytics to the process of automated claims processing can help insurers spot red flags so they can intervene during the automated process and initiate a deeper investigation or probe. This prevents consumers from taking advantage of claims processing and minimises losses caused by fraudulent claims for insurers.”
Digital Transformation to Attract Millennials—the Largest Target Market in the Insurance Industry
The final trend is using digital services to attract younger customers.
The InsurTech company claims millennials are the least engaged with insurance, but those that adopt digitalisation have a better chance to engage with the generation. Cloud Insurance said, “To increase engagement with millennials, traditional insurers need to break the stereotype of insurance being cold, slow, and inaccessible. They need to reposition themselves with digitization so they can be part of the millennials daily lifestyle.”
Some examples of these include letting travel fanatics the ability to quickly buy travel microinsurance through a button touch, or giving new homeowners customised packages for their home and family. Another example is boosting loyalty with busy professionals by integrating insurance plans and reward programs with cloud-based industries, such as health wearables.
These are just some examples of better engagement for younger people. One interesting one is using virtual and augmented reality for tele-consultations, e-visits or home monitoring.
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