In the past, customers tended to ignore their insurance after they purchased it. They interacted with their agents only a couple of times a year — to purchase a policy or file a claim — and then they forgot about it.
Now, technological advancements give consumers the ability to connect with their insurance products and services at all times, creating highly personalized services that are in high demand. In fact, 77% of consumers are willing to provide usage and behavior data in exchange for lower premiums, personalized coverage recommendations or faster claims settlements.
The following five new technology trends will change the future of insurance for carriers and consumers alike.
1. Vehicle Telematics
Vehicle telematics transmit real-time data directly to insurers through devices installed in vehicles. As a result, consumers receive more accurately priced premiums and better risk assessment that isn’t solely based on demographic information.
Telematics can also help align your auto insurance premium with your driving usage. This is known as usage-based insurance (UBI). By 2020, it is projected that 70% of all auto insurance carriers will use telematics and some form of UBI.
2. Mobile Health
Mobile health, or mHealth, refers to apps and wireless devices that can be used in healthcare for prevention, treatment and rehabilitation. Both insurers and consumers can benefit from mHealth, and its popularity is demonstrated by the fact that the industry’s revenue is expected to reach $26 billion by 2017.
Mobile health allows insurance companies to sell policies that are specific to their consumers’ health data as well as their adherence to medications and treatment plans. Consumers can use mobile fitness apps to monitor and improve their health, ultimately reducing premium rates.
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Gamification incorporates different aspects of games to add some fun to the insurance consumer’s experience while solving real-life issues. Insurance companies recognized the lack of customer engagement and have sought to improve this through gamification.
Though gamification techniques are fairly new to the insurance world, they are likely to benefit consumers. Gamification can turn formerly tedious activities — like tracking healthy habits or filling out a health risk assessment — into engaging games that result in rewards and continue to motivate consumers to live healthy lifestyles.
On top of its consumer influence, gamification will be used to improve the workplace. Forty percent of the Global 1000 top companies will use gamification as an incentive and to transform business operations. Keeping employees engaged, especially during a transition, can be highly difficult. Gaming technology is pioneering this issue. In 2012, the gamification market was $242 million. According to a M2 Research study, the market will be $2.8 billion by the end of this year. In other words, we have a lot to look forward to when it comes to interactive engagement as consumers and employees in the insurance world.
4. Drones and Aerial Imagery
While drones are often used as devices for personal enjoyment, they are also transforming the way insurance companies evaluate claims. In the past, insurers needed to visit a physical location to estimate damage and losses. However, drones can now capture aerial images that allow them to more quickly respond to catastrophic events and process claims. Cognizant, a consulting firm, estimates that drones will make insurance adjusters’ work flow 40% to 50% more efficient.
The insurance industry’s growing use of drones will help improve safety practices in the aftermath of a disaster by having fewer people — insurance agents and consumers — on the ground taking photos. Drones also allow insurance carriers to better assess how an event occurred and the resulting damages with high-resolution images from all angles.
5. Home Automation
As consumers continue to adopt smart home technology, from voice-controlled lights to sensors that detect pipe leaks, they will benefit from home insurance premiums that are more directly tied to their lifestyles.
Some insurance companies offer discounts to homeowners who use smart home technology that can decrease their home’s risk of damage or burglary. Smart thermostats, smoke detectors, security systems and deadbolt locks can all improve a home’s safety and can decrease your homeowners or renter’s insurance bill.
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Insurance companies will continue to adapt as this technology continues to popularize. More and more homeowners are investing in smart home technology — 45% of all Americans, in fact.
New technology has paved the way for a more personalized experience for insurance customers. As a result, insurance companies are shifting away from transaction-based services and are moving toward building relationships with their always-connected consumers.