The development of technology has immensely improved the ecosystem for the insurance industry. Insurtech is extending a bright new horizon.
Insurtech refers to insurers using technology to make it easier for their clients to prefer the correct product and settle their claims while also improving the insurer’s distribution capability, risk assessment, and pricing.
The Insurance Society of China listed in a 2017 white paper the following as the 10 most important technologies that will affect the development of the insurance industry in China: blockchain, artificial intelligence, Internet of Things, cloud computing, big data, telematics, driverless cars, unmanned aerial vehicles, DNA genetic testing and wearable devices.
Insurers are already using the internet to improve the services they offer, from initial underwriting to claim settlement. Some companies have introduced big data and artificial intelligence (AI) in their business. Although unlikely to completely replace humans, AI, which is currently best described as computational intelligence applied to big data, will make insurance services more intelligent through intelligent pricing, precision marketing, anti-fraud, and other technical measures.
Because of these changes, insurtech will likely eliminate many manual work positions and automate the entire insurance process.
Insurtech carries out an increasingly significant role in customer service. According to Accenture’s 2017 Global Distribution & Marketing Consumer Study, 74% of consumers are willing to get recommendations from a robo-advisor.
Consumers expect personalized solutions and insurtech helps insurers provide the optimal solution after reviewing each customer’s profile using preset standards and risks. Robo-advisors can provide customized services through voice interaction, accurate delivery, and intelligent recommendations, based on voice recognition, natural language processing (NLP), recommendation systems, and other related technologies.
The specific risk for various customers looking at a similar product can be unique. Identifying these risks in marketing promotion is helpful. Take, for example, health insurance. A customer who is at high risk for cancer but at low risk for cardiovascular disease can be provided with a recommendation for a product specific to those risks. It would be a win-win solution to reduce the premium for the customer and the business risk for the insurers.
Insurtech helps insurers use data effectively. With more customer information and better control of risk, insurers can provide a personalized product and price on the basis of intelligent insurance and intelligent risk management. Intelligent pricing systems can assess a customer’s degree of risk through decision and cluster analysis.
For example, in health insurance, the decision-making system could increase the price for older people or lower the price for people who have a healthier lifestyle. After assessing a customer’s financial condition and historical behaviors, the price could be increased if they could increase the insurer’s risk. Granular intelligent pricing will become more specific and more personalized and will adjust based on statistical analysis in real-time.
Insurtech will allow insurers to streamline claims settlement, shorten the response time, and improve service quality. For example, image recognition can automatically identify a tampered invoice and read information like name, item, amount, and number through OCR, which significantly reduces processing time. For vehicle damage claims, insurers can use image recognition to judge the degree of damage and determine the appropriate repair and reimbursement. The whole process can be completed in a few seconds without onsite personnel.
Fraud is common in the insurance industry, costing millions of dollars in the United States; in the United Kingdom, some estimates place the number of insurance fraud cases at 350 a day. Insurtech algorithms can identify potentially fraudulent claims that can then be investigated.
ZhongAn Technology, together with a number of financial institutions, has jointly set up the Financial Anti-Fraud Blockchain Alliance, which shares the calculated data among various financial institutions with secured data and privacy based on blockchain and multi-party computing technologies.
With the continuous development of internet insurance and insurtech, we can anticipate five key trends in the future:
- With the introduction of AI, insurance will become simpler and more intelligent. AI will become the digital messenger to connect insurers, customers, brokers, employees, and partners. It will play an important role in technology and customer interfaces.
- Insurtech will further integrate the businesses and platforms to establish a complete ecosystem. The competitive advantage of an insurer will no longer be solely determined by itself but will be more dependent on its partner and adopted the ecosystem. The ecosystem will have a transformational impact on the insurance industry with its strengths and advantages in various aspects. ZhongAn Technology has cooperated with other insurers, including Evergrande Life, Hengqin Life, and Jixiang Life, to explore new possibilities in the insurance industry from internet platform construction to customer co-operation, and to frontier technology co-exploration, all of which are based on blockchain and other technologies.
- With the development of insurtech, the resource structure of the insurance industry will change. The traditional insurance company workforce structure will be replaced by a new and open one, with insurtech replacing more freelance positions and fewer opportunities for traditional roles.
- Insurance product planning will be more customer-oriented, more customer-friendly, and more personalized. Insurers will have a more in-depth understanding of customer behaviors and provide personalized products and pricing strategies to different customers to improve client experiences.
- Based on insurtech, insurers will not only create new products and services but also build a modern digital industry. Insurtech will have a maximum impact on the insurance industry and reshape and redefine the industry’s technical standards and rules.