Reshaping Insurance: How Insurtech Is Driving New Industry Efficiencies

Across hundreds of industries from banking to hospitality, consumer demands are increasingly centered around seamless, low-friction experiences across multiple touchpoints, alongside a high degree of personalization.

Insurance is no exception.

Today, most insurance companies understand that a strong tech foundation is essential to quickly conceptualizing, tailoring, and launching new products aligned with changing demand, capabilities, and customer behavior. In many cases, insurtech is already integral to CX and back-end operations.

For instance, it’s quite possible for many insurance prospects to get a quote in mere minutes via digital touchpoints as opposed to manual pen & paper processes. That said, there’s a lot of ground to cover – in 2018 only about 5% of insurers in the US had fully automated their claims processes.¹ The lack of sustained digitalization at insurers around the world means that the market is ripe for technology-based disruption.

Emerging Technologies in Insurance 

For the industry as a whole, 2022 is likely to see an acceleration of the tentative digitization that has marked previous years, including

AI & ML In Claims Management & Risk Mitigation 

Leveraging AI to automate administrative claims processing has been standard for decades, especially for high-volume, small claims. By using behavioral analytics and ML to study customer data, AI programs can now quickly identify genuine claims from irregular ones, across an ever-widening spectrum of complex claim categories. A great example is Cigna’s partnership with Shift, a claims automation service that uses advanced AI models to predict and proactively fight insurance fraud.²    

Similarly, AI-driven bots are increasingly being deployed to evaluate applicants, estimate premiums, and predict potential losses – all in a fraction of the time it would take a human mind. Not only will both these developments help carriers save on manpower costs, but it also helps customers instantly settle claims, and deliver a smoother overall CX. 

IoT & Big Data Ecosystems 

CNA, a leading insurance provider, partnered with insurtech The Helper Bees to create a system to help claimants with in-home caregivers access a fully digitized claims invoice process. By doing this, they offer policyholders greater transparency, while cutting claims processing time and making the entire CX much more streamlined.³  

In that vein, the rise of smart homes and wearables will have a profound impact on the insurance industry. Firstly, they will enable data collection like never before making detailed risk assessment possible across every insurance category. Secondly, they will accelerate the speed of claims filing. In many cases the faster claims filing correlates to more accurate and authentic claims, and IoT can ensure claims are filed almost instantly. For example, imagine an airbag deployment sensor that also alerts the insurance company to an accident via telemetry, or a smoke alarm that notifies first responders and hospitals and insurance carriers about a building fire. When combined with AI, the surge in big data will also help insurers quickly tailor and launch new products for even micro-segments of their customer base.

Blockchain-Driven Efficiency 

By using smart contracts to regulate claims, blockchain could feasibly deliver vast efficiency gains for insurers. The immutable nature of the data blocks on a distributed ledger also improves transparency between insurer and the insured – in fact, it enables data and resources to be shared in real-time using a trustless model of execution. This translates into faster fraud mitigation, accelerated payouts and considerable operational cost savings.  

Drones Assessments & Inspections 

The FAA estimates that 17% of the drone deployments in the US come from the insurance industry.⁴ From risk assessment and claims verification to disaster monitoring and site inspection, drones have a variety of applications in insurance. For example, All State, a major American carrier, used drone assessments to deliver a repair estimate to a customer in as little as 4-5 days. Not only do drones reduce the time taken to verify claims, but they also eliminate the need to employ networks of field inspectors and assessors across a particular region.

The Rising Role of Insurtech 

Globally, the insurtech market is projected to see a CGR of 36% between 2020 and 2024 and is viewed as a critical growth driver in the insurance industry. Taking a leaf out of the fintech playbook, many insurtech providers are partnering with incumbents to leverage their massive customer base and data resources, while bringing agility, innovation chops, and streamlined CX to the table. According to Goldman Sachs, about 60% of insurance companies are currently investing or assessing investment potential in insurtech startups.

With thousands of new data points emerging from the entire insurance value chain, most carriers understand that insurtech offers an essential edge in terms of data collection, personalization, and processing speed.

As technology continues to embed itself into the insurance process and experience stack, the rise of ecosystems that combine competencies from insuretechs and major carriers is inevitable. What remains to be seen is which partnerships will create the impact needed to usher in the next industry revolution.