⭐ This article was featured in NU Property Casualty 360.
Insurtech is a term that combines the words “insurance” and “technology” to describe the use of emerging technology in the insurance industry. According to Investopedia, insurtech emerged around 2010. Similar to the technology used widely in the financial industry (fintech), insurtech takes digital-based capabilities for which the slower-moving insurance industry has been long overdue, to the next level.
Some examples of insurtech applications are machine learning (ML), artificial intelligence (AI), blockchain and the internet of things (or IoT). These applications offer capabilities and solutions that are more commonly applied in and associated with online insurance applications, quotes and policy management, chatbots, claims reporting, and payment processing — to name just a few.
Insurtech and COVID-19
COVID-19 was a rapid accelerator of an even greater adoption of insurtech capabilities that was already well underway prior to March 2020. As a result, industry support, trust and confidence regarding the technology continue to grow and gain momentum.
Over the past decade, we have seen the insurance industry gradually increase its adoption of new digital technology to better meet the instant online needs of consumers who, like with any other industry, are demanding speed, convenience and transparency when it comes to working with their insurer. For the insurance industry, having technology that can scale and update with these changing demands can help insurers stay ahead of the competition.
Helping, Not Replacing, Human Interactions
Despite the increased adoption of digitally enhanced capabilities and the growing list of proponents for automating certain processes, there are skeptics who have concerns regarding the impact on humans in the workplace. Those in opposition feel that this new technology is focused entirely on improving processes by replacing humans with machines – which is simply not the case. In fact, a key value proposition of insurtech is to enhance and streamline processes, making it easier for humans — such as carriers, brokers and wholesalers — to focus less on processes and more on personalizing the overall insurance experience for clients and policyholders.
For example, AI is frequently being used in combination with other systems, such as claims processing. By streamlining processes, AI can help alleviate an adjuster’s backlog of claims by allowing a policyholder to immediately report a claim online, as well as track the status of a claim. By removing any excessive human intervention at the start, a claim gets in the system sooner and allows the adjuster to bypass initial, routine processing steps – freeing up time for handling additional claims.
Initially, AI was only expected to improve efficiencies and automate existing customer-facing underwriting and claims processes. Over time, however, its impact has become more profound in identifying, assessing and underwriting emerging risks and in the identification of new revenue sources.
When you think about the influx of claims after a major catastrophe, this technology not only makes it easier for underwriters to manage claims but also expedites claims processing by pushing more claims expeditiously through the system and getting payments issued quicker to those who need them. It can also help reduce the administrative costs of claims.
Other applications that are providing benefits to insurers include chatbots (driven by AI) that can respond to initial internal agent inquires, and algorithm data (driven by machine learning) for identifying areas, such as customer service, fraud detection and operational efficiency, that need improvement. This data can also be helpful in the development of new products and services by performing a fine-grained analysis based on an individual policyholder’s behavioral patterns, such as what the person wants and needs.
Without understanding the holistic nature of insurtech and its various applications, it’s no wonder that some companies continue to view the entire process as competing with or even replacing human intelligence. The reality is many applications are designed to work in tandem with humans, helping save valuable processing time in areas such as assessing accidents, identifying discrepancies in billing, and allowing consumers to view and manage policies and billing anomalies online — to name a few.
An estimated 50% of the workload in the insurance industry involves collecting and processing information. This leaves experts to believe there is potential for technology to automate nearly 43% of a worker’s time. When applied correctly and augmented with human intelligence, processes and workers’ skills are enhanced by building on already established capabilities.
As 2022 approaches, we are sure to see more companies make the investment in new technology as they look to lower costs, create a better customer experience, and improve efficiency by reducing workers’ processing loads.
As the insurance industry model changes, insurers and brokerage firms are looking to capitalize on insurtech opportunities to improve operations and better serve the needs of today’s digitally immersed customers. At Direct Connection Advertising and Marketing, we understand the importance of leveraging insurtech capabilities. Whether you are launching a new product or implementing new service capabilities, our marketing experts can give your brand the competitive advantage it needs — at every stage of the buying cycle.
For additional information, contact Brad Nevins at email@example.com or 707.759.5391