With a prevalence of digitalisation in all the spheres of our lives, naturally, a variety of industries are expected to suffer some profound modifications as well. The insurance industry is already deeply changed by the technological advancements in today’s environment. The sector is on the verge of a continuous shift. Insurance brokers already embraced some trends that are profoundly based on technology and the incredible disruptions that it brings. Below are some good examples of how does today technology help insurance companies and brokers deliver better, measurable results.

Design Better Insurance Packages

A design for humans is desired in the insurance sector, because guessing human behaviour and learning what are the daily risks at which each insurance policyholder is exposing themselves to, can help these companies tailor better products. More than this, learning how to accurately predict human behaviour will help insurance companies to minimise the risks at which they expose themselves to with high rates of success.

Today’s technology is able to help insurers design better products that suit everybody’s personal lifestyle and workplace risks and goals. For instance, car insurance policies are designed today based on the “pay as you drive” and “pay how you drive” principles, which has been proven to have better results when it comes to motivating a positive human behaviour.

Also, AI technology and machine learning make it possible for insurance brokers to accurately identify those policyholders with increased chances of an accident, those exposed to more healthcare risks etc. This makes it possible for the broker to personalise each insurance policy so it fits the very specific needs of each holder.

Today, an attempt to discipline the insured and promote a better driving style, in the car insurance sector, has already been made. Those with a low car accident risk pay less for their insurance products, while those with a higher risk pay more money for the same product. This minimalizes the broker’s financial risk, but it also promotes a better driving style.

Artificial Intelligence And Insurance Products

There are three key ways in which the insurance sector will see the change with the help of AI technology. Policyholders, brokers and insurance carriers are expected to experience lowered operational costs, with these advancements.

  • Behavioural Policy Pricing – we mentioned this trend previously, when we discussed better personalisation opportunities, with technology’s help. With IoT immersion in all aspects of our lives, sensors, platforms and apps can deliver the insurance carrier relevant information regarding a policyholder’s behaviour, risks, patterns, depending on the interest area: driving manner, health risks, workplace accident chances and so on. The data is gathered from multiple sources and compiled by AI algorithms. This will help the carrier set a pricing policy depending on each candidate’s risk. Some candidates end up saving on their insurance policies even up to 30%. Certain apps analyse the driver’s accident history and tailor specialised products.
  • Customer Experience & Coverage Personalisation – some carriers already offer a seamless customer experience and coverage options. Automated purchase options, chatbots and geographic data. In the near future, carriers will be able to deliver highly personalised on-demand insurance policies and products, depending on the very specific circumstances in one’s life at the given present.
  • Faster Claim Settlements – as AI penetrates deeper in the insurance sector (the four biggest insurance carriers in the US base their operations on AI) solving claim settlements becomes significantly easier and faster. Because of the intelligent algorithms used in the process, the likelihood of fraud also decreases. AI has even more potential in easily solving claims and creating a better general opinion on the insurance market as it is. AI and the lack of human interaction, predictive calculations and estimations, this will also boost the policyholder’s trust in insurance carriers.
  • Facile communication – some insurance carriers have implemented software products based on artificial intelligence that make communication between policyholders and carriers easier. With a full integration in the digital ecosystem, these products can answer simple questions such as “When is my next payment due date?”. The potential this technology has is an immense one, soon these assistants might be able to answer to more complex questions and hold full conversations with potential policyholders (Allstate has a similar system implemented).

Machine Learning And Insurance Policies

Right next to the advantages brought by AI, machine learning and its applications are here to change furthermore the insurance future. With machine learning’s help, carriers can now easily create a competitive advantage, run various business models through machine learning algorithms, better allocate their staff and resources and decrease fraud chances.

The sophistication of these technologies has proven to be a great aid in the industry. Starting with increased capacities to boost a carrier’s competitively, we now know that these companies can easily use IoT to create various models, explore new niche opportunities, and learn which is the most profitable business path for them. Currently, only several carriers on the UK insurance market have access to such technologies, but sooner rather than later, smaller ones might increase their capacities with intelligent machine learning algorithms.

This is an older practice, but running various business models through tired and tested models is an outdated method. IoT and machine learning can help carriers predict which business model is the more sustainable and profitable, depending on the niche, direct competitors and policies issued. In the beginning, companies used software products form companies such as Microsoft, but outsourcing these capabilities has been the go-to method, lately. Starting by implementing these models at small rates, companies can learn which is the most sustainable and beneficial for their own circumstances.

While the problems and challenges in the insurance sector remain largely the same, the sophistication with which each carrier approaches those makes it possible to deliver better, more efficient services and products. More than this, while in the past insurance brokers were always exposed to fraud chances, today, machine learning and artificial intelligence minimise these risks enormously.

The future of insurance is now, but more is yet to come, with the continuous technological disruptions that penetrate all sphere of our lives.