A report by McKinsey describes a very different future scenario for the insurance industry. According to the report, the insurance technology, or insutech, will be so different from the current landscape that it will be difficult to compare.
With the fourth industrial revolution upon us, some technologies like decentralization, IoT, AI and other forms of automation are finding increased use in different industries across the globe. These have made it into the insurance technology news too.
This new wave of adoption for insutech is good news and bad at the same time.
For existing firms, if they stick to the traditional methods, they will find themselves outpaced and out gunned swiftly. That is why many are already starting to realize that the current broken system will not serve their purpose long and are integrating the latest the world has to offer.
Top Techs Changing The Insutech Scene
Like any fintech firm, insutech ones are also taking advantage of bleeding edge technologies and improving their systems.
According to the latest insurance technology news, the top disruptive insutech adoptions include:
Internet of Things (IoT) Will Collect Data
IoT is the future of connectivity and for insurance firms, this data can be a goldmine. Many IoT devices have already seen use without many of us even realizing what it is.
GPS and accelerometer devices are deployed by car insurances to track driving habits to adjust their premium. This is just one example of many devices that can collect thousands of points of data.
With IoT, firms will be able to better judge the exact requirements of their customers and offer packages based on the analysis. IoT will also help post client acquisition, speeding up data collection to determine claims.
Cloud Computing Will Reduce Costs
All of the data generated by IoT needs a powerful computing system. For lean insurance companies, investing in heavy IT infrastructure can be a bit costly and in the competitive environment they operate in, it may not justify the cost.
Cloud computing comes as the perfect answer. From online storage to data processing, cloud storage brings in economical means to avoid expensive on-site storage and computing.
Paired with SaaS (Software as a Serve), they can further cut down costs on subscription to the software required.
Artificial Intelligence (AI) Will Speed Up Claims
AI is currently vastly under-utilized by the insurance industry.
With algorithms improving and AI becoming more human like day by day, it can boost operations in ways unimaginable a few years ago. The technology can help firms to automate processes like claims. Unlike the current automation systems, an AI one will be able to go much beyond than just accepting claim applications.
It will be able to go through the details, use the data from IoT, processed by cloud computing and come up with answers such as accepting the claim or rejecting it.
Of course, in this scenario, there will still be the need of a human input. But with a properly implemented AI system, the human involvement can be reduced to going through the final result to make sure the AI has everything tied down correctly.
Oh, and yes, the speed at which AI will process this will also be a boost to the operational speed of the insurance firm.
Trustless Systems With Blockchain
Blockchain seems to be the wonder drug in today’s tech life. It will also see vast application in insurance firms.
But rather than having cryptos (though insurance documents as NFTs is a possibly), the technology will be primarily used for ensuring client privacy.
Insurance companies collect and share a lot of data, especially on their customers. Take the IoT tech above. Your driving habit is collected multiple times an hour, perhaps minute-wise.
The data shows the places you go, the insurance firm knows where you live and work. Tie all this what they have already collected on you (documents such ID, social security, credit details, etc.), the thought of having data breaches for nefarious purposes such as identity theft is scary.
Using the military grade encryption blockchain is famous for, insurance companies can ensure that all client data is safe from prying eyes.
Blockchain consensus systems such as Zero Knowledge Proof can also be implemented, where personal details are never shared with other firms or government departments (a need when claiming an insurance), but a digital handshake is done which just says that the information is true and verified.
Efficiency Is The Keyword
Insurance firms are notorious for keeping tight lipped and a bit draconian when it comes to processing claims. They have to be though. After all, they lose money every time they honor a claim.
Hiding behind a lot of clout, the attempts to deflect claims has led to the entire industry being inherently inefficient in operations.
Many modern greenfield insurance firms have found that using insutech can help them beat the competition by being transparent and fast in processing claims.
The swift adoption of these have already put many newcomers on the insurance map, beating many well-established companies.
Their only survival is to change with times.
