At a time when many insurers believe that 20% of their business could be soon lost to insurtech startups and when roughly one third of insurance industry CIOs said that, if given an extra $5 million to spend, they would spend it on big data or increased data collection, understanding technology trends is critical to gaining an edge.
So, let’s look at three of the emerging technologies affecting the insurance sector.
1. Sensors and other data-tracking technologies
In the past, insurance companies and actuaries based their pricing on aggregated data from large numbers of customers. Today, innovations in internet-connected devices such as wearables, auto devices and smart homes are giving insurance companies meaningful data that is specific to individual policyholders.
For example, Progressive Insurance created Snapshot, a device a policyholder can install in his or her car that allows Progressive to monitor certain data about the customer’s driving habits and to adjust pricing accordingly. Progressive claims to have distributed $600 million in discounts to its policyholders, largely because of data from Snapshot.
Snapshot is just one example of how sensors and data-tracking technology can generate savings for policyholders while, at the same time, making insurers more efficient. As this technology continues to gain adoption, many more sensors will be available to monitor policyholder data on health, autos, homes and more.
Drone technology is a rapidly growing niche in the insurance industry, with some predicting it will reach a yearly value of $6.8 billion in the coming years. This growing interest in drone technology was a driving force behind a recent panel discussion on drones at the Contractor Connection conference in St. Louis. WeGoLook’s COO, Kenneth Knoll, participated in this panel, which was attended by more than 3,000 industry professionals.
Knoll noted that drone technology applies to a wide range of insurance services — roof inspections, underwriting, disaster relief, crop inspections, and much more. Consider an order recently received by WeGoLook requesting a scene inspection at a commercial location where an injury occurred. As compared with photos taken from the ground, aerial imagery captured by one of WeGoLook’s licensed drone operators offered the insurer client a much more effective representation of the scene in question.
3. Paperless solutions
Evolving technology also makes it possible for insurers to onboard new clients, handle claims and send notifications in a completely paperless manner. The increased digitization of insurance solutions has the potential to dramatically improve the speed and efficiency with which insurance companies operate. For example, Lemonade, an insurtech company, allows clients to sign up for policies and file claims in less than three minutes, using only a mobile device.
Mobile is the new paper as millennials have an extremely high percentage of smartphone use (97%). Carriers that can
best cater to paperless, mobile solutions will gain a strong competitive advantage.
See also: The Story Behind the Lemonade Hype
Some have argued that we are currently experiencing a fourth industrial revolution powered, in part, by the developments noted above. Sensors, drones and paperless solutions are just a few of the technologies driving this revolution.
Carriers must make these types of innovations a priority because they are fundamentally changing the expectations of clients. It’s time for all insurance professionals to acknowledge and embrace this digital transformation.