You’d have a hard time finding an industry that isn’t evolving because of modern technology. Still, there are some sectors you wouldn’t think of having their own branch of tech. Insurance probably wouldn’t come to mind, but technology is a growing field here.
Insurance technology, or insurtech, refers to tech made to improve this industry. It includes things like big data that have applications everywhere, as well as gadgets unique to the field. What does that entail, and what does it look like in practice?
The Role of Tech in Insurance
Like with any industry, technology in insurance serves to make processes faster, easier and more accurate. These advantages are especially enticing for a sector like insurance that has to deal with a lot of paperwork and legal regulations. By introducing technology, companies improve the experience for both themselves and their customers.
Insurtech can help companies detect fraud and make more educated estimates about risks, leading to better deals. It can make it easier for customers to file a claim and get fair treatment. The potential for insurtech is so vast that investors put $7.6 billion into the sector in 2018 alone.
Types of Insurtech
There’s no one-size-fits-all approach to insurance coverage, and the same is true of insurtech. It’s a broad category, ranging from computer software to little gadgets. As technology as a whole keeps improving, insurtech is likewise always growing and changing.
Insurtech isn’t necessarily a new field, so you may be more familiar with it than you think. You’ve almost certainly encountered some of these insurtech examples before but may not know about others. It would be near impossible to list all the possible types of insurtech, but here are five of the most prominent ones.
1. Artificial Intelligence
Artificial intelligence (AI) is one of the most promising forms of tech today, especially in insurance. The most obvious application of AI in the industry is in risk assessment through predictive analytics. Since AI is typically better at connecting the dots than humans, it’s ideal for determining whether something or someone is a liability.
Using AI to assess risks can benefit both the insurer and the insured. AI provides more accurate assessments, lowering the business risk for providers and making things fairer for customers. Further implementation of AI can also help companies automate some tasks, freeing employees to focus on other matters.
2. Internet of Things
If you take a look around, you’ll find IoT devices everywhere. Even if they’re not made for or by insurance companies, they can be a valuable part of insurtech. With the owner’s permission, they can serve as data points to improve providers’ analytics.
With more data points, providers’ liability assessments will be even more accurate, leading to fairer deals. IoT devices can also help insurance companies measure the performance and longevity of customers’ vehicles. Since some IoT devices improve home or auto safety, having them could even lower your insurance premiums.
If you’re not familiar with telematics, think of them as wearable gadgets for your car. These devices that plug into your vehicle can send information about how you drive to your insurance company. When it has this extra data, your provider can offer more personalized services.
If you have an excellent driving record, your rates won’t increase because of a ticket, and telematics help with that. By measuring things like acceleration rates and braking, they can determine if you’re generally a safe driver or not. If you are, telematics will prove it, giving your provider a reason not to increase your rates after one ticket.
Drones are another technology you’ll find across many industries, not just in the insurance sector. While they’re not unique to the area, they are an increasingly common tool in insurtech. The birds-eye view that drones provide can help insurance companies in nearly all stages of the process.
First, providers can fly a drone over an area to survey it, finding any risks before they insure a property. If an accident happens, they can use drones again to understand the scope of the damage. These machines help insurers analyze an area far faster, and keep human workers from endangering themselves since they don’t have to climb roofs.
5. Smartphone Apps
The smartphone may be the most versatile and game-changing piece of technology to emerge in the 21st century. People downloaded 204 billion mobile apps in 2019, so it’s no surprise that insurance providers are transitioning to these platforms. You almost always have your phone with you, so it’s an excellent gateway for providers to help you.
With many providers, you can file a claim with nothing but your smartphone. By taking a few pictures and filling out some electronic forms, you can give your provider everything it needs. The speed of this process is convenient for you and helpful for the insurer.
Concerns Over Insurtech
Like with many emerging fields, there are still some lingering concerns about insurtech. While insurance technology is by no means a controversial topic, some people still have reservations. Most of these, though, apply to increased technology as a whole, not to insurtech specifically.
The leading concern over insurtech is the worry of providers encroaching on customers’ privacy. With so many data points from things like smartphone apps and telematics, companies can learn quite a bit about you. Insurers could determine where you work, what places you frequent and even what some of your hobbies may be.
As insurtech expands, customers will likely hold providers to higher privacy standards. With more advanced technology, they can learn more, so privacy will become an increasingly relevant issue. This trend could lead to a kind of user-provider confidentiality agreement like you see in medicine.
Technology Is Shaping the Future of Insurance
Before insurtech, the insurance process could be long and complicated. The nature of the industry means there’s a lot of legal work involved, which can lead to speedbumps. Insurtech helps move past these complications, making the process simpler for everyone.
As technology continues to advance, insurtech will only grow. Developments in tech will likely change the way insurance companies operate altogether. The future of the industry depends on technology.
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