March 30, 2021

Technology applied to insurtech

Erick Tijerina
Insurtech companies have opted for the most current technological trends, but what are the most disruptive technologies that those companies are betting on?

The insurtech sector is one of the most dynamic in the industry in terms of digitization and one of the pioneers in adopting new technologies to improve its business. Companies like Figo Pet Insurance have focused on the customer and, in order to offer more personalized experiences, have opted for the most current technological trends in data, connectivity, or analytics. 

Undoubtedly, this upward path is motivated, in part, by the digitization commitment that the sector undertook years ago, as we have mentioned in previous blogs. But what are the most disruptive technologies that insurtech companies are betting on?

Analytics and Big Data

Predictive analytics from large amounts of data has been a great challenge since the concept of Big Data entered the professional market. For the insurtech sector, it is essential to know your clients in order to offer them highly personalized products that are not only attractive to them but also provide profitability to the business.

For this reason, more and more tools are being adopted that are capable of analyzing a large amount of data and making behavioral predictions. The topics that brought the most interest from insurtech companies last year were:

  1. Price and level of risk
  2. Identify those customers with the highest risk of cancellation
  3. Identify the risk of fraud
  4. Complaints and claims
  5. Identify unsubstantiated claims
  6. Anticipate trends

Artificial Intelligence (AI)

As we have indicated, users are always looking for experiences that are as personalized as possible, especially in an area as crucial as insurance. Artificial Intelligence in the inusrtech sector provides the ability to create those unique experiences, accelerating the natural rapprochement between new technology development and market demand.

With AI, insurers can improve claims cycles and rewrite the entire process, so customers are more satisfied. These solutions also allow the business to access information more quickly, dramatically reducing the time it would take for a person to produce reports with conclusions, based on the data.

What's more, according to a report by the consulting firm PwC, Artificial Intelligence will improve efficiency and automate customer suggestions and comments, as well as complaints procedures. This will have a deeper impact on the business, as it will be possible to identify, classify and detect emerging risks and find new sources of income.

Machine Learning and bots

According to the 2019 Insurtech Sector Trends in terms of technology, some of the most used solutions will be the result of the superposition of several tools, in order to make more precise solutions to specific problems. This is what happens with Machine Learning (ML) which, according to Forbes magazine is, technically, a type of AI but more specific. ML is based on the idea that "we are capable of building machines that process data and are capable of learning from it, without human supervision."

Machine Learning not only improves claims processes, but it also automates them. When files are digitized and accessible via the Internet, company managers can analyze them using pre-established algorithms, improving procedure speed and precision. This automated review can impact more than just claims, as it can be used by risk departments and corporate policy.

This technology is precisely the one used by chatbots, a very popular tool in the insurance sector. In fact, by some estimates, by 2025, 95% of all interactions made by insurance holders will be managed by them. These solutions use AI and ML to interact with customers, which allows companies to save on staff, time, and even budget. Today, a chatbot can already talk to a customer about complaints procedures, manage human interventions (for example, request a car crane), or solve more complex cases.

Internet of Things (IoT)

Most consumers would be willing to share personal information if it means saving money on their insurance, and the Internet of Things (IoT) can make this easier. Thus, insurers could use data obtained through IoT devices, such as those that make up smart homes or wearables (smartwatches, smart bracelets, etc.), and make comparisons of certain ratios, managing to mitigate risks and even, prevent economic losses.

Thus, the Internet of Things will reinforce another type of insurance technology with real-time data, improving the current risk process and giving the business more power to directly impact its pricing policy.

Social Media

Social media and its role in the insurtech industry are related to marketing strategies and the development of ads, which are increasingly cognitive. The data obtained by social media reduces the level of risk in some products, such as real estate and accident insurance; In addition, it reinforces the ability to detect fraud and is capable of going one step further in the personalization of new experiences for the customer.

Fraud is precisely one of the aspects that most worries the insurtech sector, but it is also the subject of controversy. Being able to track the social activity of the insured and compare it with certain claims, have raised certain discrepancies, since their practice borders on the privacy of consumers, highly protected by regulations such as the GDPR.

In conclusion, the insurtech sector continues in search of technologies that allow it to advance in its business while improving the customer experience. Betting on the new IT trends proposed by the market will not only allow them to compete in better conditions but also keep pace with an increasingly demanding market. Technological innovation in terms of IoT, social media, or Big Data has "sneaked" into the daily lives of insurance clients, who can take this opportunity to learn more about them and offer what they are most looking for: personalization.

Looking for premium insurtech content? look no further and click here to acceleate you insurtech strategy by listening to FIGO's VP of technology discuss how their company has grown to be the largest independent pet insurance provider in the US with a valuation of $125MM.

About the Author
Erick Tijerina
Erick is passionate about video games and geek stuff, he loves board games, and oh, he is also our Social Media Specialist!
Learn More About ArkusNexus