The insurance sector is progressively adopting analytics to enhance various aspects of its operations, from risk management to customer engagement.
Taking a comprehensive view of the industry’s current state, significant transformations driven by technological advancements, regulatory changes, and economic influences come to the forefront.
These include: _
- Digitalization of processes
- Integration of data analytics
- Prioritization of cybersecurity
- Growing reliance on big data, machine learning, predictive analytics, customer analytics, and fraud detection.
According to a recent study conducted by DAMCO, 86% of insurance companies are actively developing insurance analytics services, aiming to optimize their predictive capabilities with the aid of comprehensive big data reports.
Considering these developments, several technologies are poised to reshape the insurance industry.
5 Trending technology adoption in Insurance Industry
Big Data Analytics –
Big data analytics transforms insurance by utilizing previously untapped data sources such as smartwatches, telemetry, claims history, and satellite imagery to enhance risk assessment.
This data-driven approach automates processes, allowing for greater complexity without increasing costs, and revolutionizes how premiums are calculated based on factors like age, location, and personal information.
Example: By analysing data from various sources like social media and smart devices, insurers can personalize premiums based on individual risk profiles, resulting in more accurate pricing and tailored insurance coverage.
Artificial Intelligence – AI, alongside blockchain and big data, is set to revolutionize the sales and customer service-focused insurance industry. To enhance operations efficiency and reduce costs, insurance companies are increasingly relying on public and private cloud data warehouses and data lakes, which facilitate streamlined claims processing and improved business agility at affordable rates.
Example-. Leading tech giants like Microsoft and IBM are capitalizing on chatbot technology, enabling AI insurance agents to leverage factors such as a prospect’s location, social media data, coverage preferences, and policy details to provide personalized experiences.
Internet of Things
IoT is revolutionizing the insurance industry by enabling remote monitoring of objects and people. This data can be leveraged through insurance analytics applications to proactively manage risks, offer usage-based insurance, and accurately price policies based on precise risk assessments.
Example- Tracking devices installed in homes can detect and alert insurance companies in real-time about potential risks like water leaks, fire hazards, or security breaches, enabling proactive measures and minimizing damage.
Block Chain
It offers secure and transparent transactions, streamlined claims processing, and enhanced fraud detection.
Example- smart contracts implemented on a blockchain can automate claim settlements, ensuring quicker and more accurate payouts to policyholders.
Automation- It is reshaping workplaces across various industries, and the insurance sector is just one among many that has embraced this transformative technology.
The efficiency of back-office operations has witnessed an unprecedented surge as an array of processes are now being delegated to machines, enabling streamlined workflows and optimal resource utilization.
Example- Claims processing automation utilizes artificial intelligence and machine learning algorithms to analyze documents, assess damages, and expedite the settlement process.
5 Use-cases of Insurance Analytics
Improve Risk Scoring and Claims Processing
Utilizing data for risk calculation and assessment improves
- Risk management
- Fraud detection
- Personalized pricing
- Profitability
Technology like analytics, IoT, cloud computing, and blockchain grants insurance companies and InsurTech unparalleled scalability to target new segments efficiently.
Bots are replacing brokers in the office, gathering information from sources like drones, IoT, telematics, and social media for efficient claims settlement.
For instance, crop insurers employ drones to gather inaccessible farm data and customized AI solutions for crop insurance and credit evaluations, including credit farm scoring applications for precise yield and assessment.
Design Attractive Bundled Offerings
Value-added insurance products gain popularity among insurers, driving customer-centricity and fostering frequent customer engagement.
For instance, InsurTech companies offer bundled risk prevention services and technologies to lower premiums.
- In the realm of Life and Health insurance, health management apps support individuals in managing diseases, medication adherence, and adopting healthier lifestyles.
- Non-Life insurance also benefits from services like roadside assistance, travel agency support, and smart home monitoring through IoT technology.
These offerings often supplement traditional insurance products and are sometimes extended to non-customers. Customers willingly embrace these value-added services and share more data with insurers to access reduced premiums.
Deliver Seamless User Interactions
Integrating social media into the customer portal offers convenience and gathers valuable customer data.
Kroodle, a Dutch insurance company is a perfect example of this as it allows customers to log-in and interact using their Facebook credentials, facilitating seamless connectivity. InsurTech companies can leverage social media data to detect fraud by comparing policyholders’ social media behaviour with their claim history.
However, it is essential for insurers to address data privacy and security concerns associated with utilizing social media data for such purposes.
Improve Customer Service
24/7 chatbots enhance engagement and streamline experiences with InsurTech companies.
According to Servion, it is projected that by 2025, chatbots will handle 95% of customer interactions across industries. Traditional insurance companies are also rapidly innovating to meet evolving consumer needs and digitalization demands, offering innovative products and superior customer experiences.
AI-powered instant claims processing revolutionizes customer experiences and reduces operational costs.
Example– InsurTech players like Lemonade leverage automation, chatbots, and analytics to efficiently handle underwriting inspections, settle claims within minutes, and align closely with their customers by utilizing vast amounts of historical data.
Discover the impact of data analytics on the insurance industry across the entire consumer life cycle, revolutionizing processes and outcomes.
Streamline Sales, Marketing, and Distribution
Ability to capture and analyse data will a focus for insurTech companies as it underpins customer segmentation and enables the identification of cross-selling and upselling opportunities.
Data science plays a crucial role in capturing a wide range of customer data points, enabling companies to identify factors leading to customer attrition, evaluate campaign effectiveness, and devise targeted marketing strategies for maximum impact.
Wrapping Up:
To stay competitive in evolving market conditions, companies must adapt and leverage the power of data analytics, cloud technology, AI, and blockchain in the insurance industry.
Failing to embrace these advancements puts even established legacy players at risk of being perceived as outdated.
Effective change management becomes crucial in this transformation. It is essential for companies to understand that developing capabilities and realizing the value from these technologies will require time and patience, as progress is a prerequisite for achieving true success.
We at Polestar Solution helped a Life Insurance giant for implementing Qlik sense which resulted in 90% reduction in manual interventions and enhancing overall performance by 30%. Explore our solution.
To leverage a tailored data analytics solution for your organization, book a free consultation today!
