For 50-odd years, the way insurance has worked has remained the same. But in the last few years, catalysed by the pandemic, the rise of digital solutions and insurtech looks to break down historical insurance preconceptions have emerged.
As we previously heard, artificial intelligence (AI) and machine learning (ML) are having a huge impact on insurance. These technologies are revolutionising the way in which the traditional sector has been run. However, there are other innovative techs which are changing the insurance status quo, and in turn insurtech, too.
In today’s article, we reached out to the industry to find out more about these other technologies.
Patrick Greene, VP of data at insurtech Munich Re Automation Solutions, noted the importance of embedding innovative technologies within the end-to-end process in order to truly transform the insurance industry.
“Despite an over-reliance on manual procedures and evidence collection during the underwriting process, the insurance industry is now leading the way in the adoption of new technologies according to the Bank of England’s recent report around machine learning in the financial services sector.
“Increasingly, the sector is using data to support and optimise the user journey, keeping people at the centre of the process. Whether using AI to transition fully away from paper to digital forms, using data to reduce the number of questions asked during the application process, or using machine learning and augmented underwriting to direct applicants through the most efficient path for them – all this is being done with the aim of providing customers with the optimal user experience while protecting their data privacy.
“Still, in order to maintain this positive momentum, we need to see both responsible AI and explainable machine learning technologies more deeply embedded within the end-to-end process. Only then will we realise the full extent of insurtech’s capability to transform the industry.”
The emergence of AI chatbots
Jakub Dryjas, CEO of Tensorflight, the AI imaging-based insurtech pointed out how cloud computing and IoT will also impact the insurance sector alongside the emergence of AI.
He said: “Insurers will increasingly combine data intelligence tools with AI chatbot technology to help consumers compare insurance policies and prices directly from the provider, receive instant quotes, and answer questions about coverage and benefits.
“As a result, we will see more and more insurers bypassing traditional brokers and digital marketplaces in order to operate more efficiently and cost-effectively, which will be crucial as we head into another challenging year for the insurance industry.
“Technologies like AI, IoT, and cloud computing will keep transforming the insurance industry and will be used in combination to support each other. Insurers will prioritise the implementation of the solutions which enable them to streamline processes from underwriting to claims and which help to improve profitability.”
Automating tasks with visual intelligence
Julio Pernía Aznar, co-founder and CEO of Bdeo, the motor and home insurtech, stated that visual intelligence is an example of how AI has been adapted and evolved.
“Visual intelligence, a type of artificial intelligence, is an emerging technology that insurance companies have begun using to eliminate bottlenecks and automate tasks, especially in claims processing and underwriting. Based on computer vision algorithms, Visual intelligence is capable of identifying and categorising objects or attributes within digital images or video.
“Insurers can use visual evidence to analyse images submitted by claims holders, which plays a crucial role in claims processing in the home and motor vehicle insurance industry. They can analyse images submitted by claim holders to identify the type and cause of property damage, such as a flood or burst pipe, or determine which parts of a vehicle need to be repaired or replaced, reducing the time needed to calculate repair costs from days to minutes.
“By automating this repetitive work with visual intelligence, insurers can reduce operational costs and focus more on the customer experience. For example, personalising their customer support and making the claims process as simple, transparent, and efficient as possible, resulting in a boost in both short-term customer satisfaction and long-term customer loyalty.”
Don’t forget about location!
Brent Francom, senior product manager at Smarty, the location data analyser, took a step back and looked at the evolving insurance market in the bigger picture. Francom looked at how geocoding could impact the insurance sector, discussing how it could serve more customers.
He said: “Location is perhaps the most important factor to keep in mind when it comes to the real estate market. The same could be said for underwriting in the insurance space. It requires richer detail on an address to correctly assess risk, as important information like building materials, size, and foundation type is not always enough. Ultimately, there is no such thing as a bad risk, only a badly priced risk; this is why geocoding has become an increasingly important piece of insurtech.
“Geocoding enables insurers to more accurately assess the risk and insurability of a property based on its precise location and detailed geographical location data. This provides insurance underwriters a more complete overview of nearby natural hazards such as earthquake fault lines, proximity to potential wildfire danger, hurricane and tornado threat, and historical information on previous perils, creating a more detailed risk profile.
“Rooftop geocoding is another important aspect of this emerging technology. Through the use of geospatial imagery, insurance companies are able to get roof and property imagery, enable damage detection, and acquire accurate roof and property measurements without even visiting a property. Naturally, insurers are very sensitive to accurate location, and a true rooftop location (vs a street or parcel centroid) makes a measurable difference in a property’s risk profile.”
Underwriting no longer requires humans
One of the biggest flaws of legacy insurance methods was the possibility of human error. There was always the possibility of a miscalculation looming. Jack Dubie, co-founder and CTO of Ladder, the life insurtech, says that underwriting automation and the use of APIs can put these fears to rest.
He commented: “Over the past five years, there’s been a significant investment in underwriting automation, leading to an exciting trend in insurtech: APIs and embedded insurance. This has allowed customers to apply and buy (if given an offer) a fully underwritten product in one session, sometimes without requiring a human in the loop. With APIs and embedded partnerships, purchases can be more contextual; APIs can offer users the option to apply and buy while looking for P&C insurance, browsing their bank, or registering for baby gear.”
Here come the drones
Even though the concept of having robots fly around to do inspections has only ever been depicted in films, it may be happening very soon. According to Gregg Barrett, CEO of Waterstreet Company, the property and casualty insurance provider, drones, in addition to IoT, will be integral to ensuring the future of quick and accurate insurance underwriting.
He noted: “IoT devices have been exciting technological developments, especially in understanding risk. We’ve seen an increase in analysing data from IoT devices to better assess and thwart catastrophic events in homes, and in cars to support usage-based automobile insurance, and determine how risky the driver is.
Additionally, drones are becoming integral tools. For home inspections and the underwriting process, sending a drone to view the outside of a building rather than an individual for pictures or damage assessment is a key development. Insurance companies use drones to assess structural damage in insurance claims instead of sending a human.”