2021: An Insurance Odyssey — A Look at the Future of Insurance
All the new, exciting technologies — artificial intelligence (AI), natural language processing (NLP), robotics, blockchain, internet-of-things (IoT) and so forth — that loom on the horizon are going to disrupt global industries by redefining labor and human connectivity. The way that we think about people and data is changing. The future of insurance is intrinsically interwoven with advancing technologies. Are you ready?
Where We Are (The Current)
To say that technology will disrupt insurance is a bit of a misnomer. SaaS, AI, and deep learning have already completely reshaped the way that financial intermediaries, insurers, suppliers, and brokers perform their day-to-day jobs. Insurtech startups and cloud-based solutions have lifted the curtain on insurance processing and removed redundancies while streamlining specific functions.
On the consumer side, auto insurers provide telemetry-based packages that assess granular driver data to determine risk analytics. Offering insurance packages based on behavior analytics lets insurers remain competitive long-term and profitable across channels, and this methodology will continue and expand over the next few years.
Of course, this digital shift hasn’t only restructured insurance models from a data and delivery perspective; it’s also shifted the ways that customers demand and consume insurance. According to a McKinsey & Company report, customers expect more transparency, 24 by 7 access to insurance support, one-click shopping, and clear and relevant information regarding insurance. This shift in customer expectations in the digital age isn’t specific to insurers; it’s apparent across industries and consumer channels.
The current insurance ecosystem is leveraging technology to improve service and profitability, but this digital disruption is evolving. The future of insurance will be synonymous with hefty tech stacks, big data, and deep learning mechanisms.
Where We’re Going (The Future of Insurance)
The future of insurance is going to change across channels to be more consumer-friendly, automated, and connected.
Blockchain is reshaping data exchange and storage. We’ve seen blockchain use cases in underwriting when underwriters are using blockchain as a source of true data. Another use case for blockchain is claims processing. Since blockchain is a peer-to-peer solution that can take multiple inputs from a variety of users without tampering with the source data, it’s a great way to improve outputs and reduce redundancies during claims processing procedures. A future where blockchain disrupts insurance by reducing touchpoints and increasing speed isn’t as far away as you may think. Global players like Zhong An are already using blockchain to simplify their smart contracts, and the future of insurance data exchange is hinged to blockchain technologies.
Artificial Intelligence (AI)
The future of insurance looks to be a faster, more automated, and less-active process. Most of this is due to AI advancements. AI can leverage automation and deep learning insights to change distribution methods for both customers and insurers. AI will create highly-accurate risk profiles by leveraging analytics and sophisticated algorithms that give you an instant snapshot of customer risk threats. This means that the instant quote process truly becomes instant. Customers are delivered hyper-personalized, accurate insurance quotes based on risk analytics and psychometric, biometric, and behavioral data.
The rise in internet-connected-devices is going to drastically change the data and risk assessment space for insurers. The IoT will give insurers an in-depth snapshot of consumer behaviors and actions, which will ultimately determine their premiums and risk factors. Wearable devices can snowball user data by gathering advanced analytics (such as exercise, eating habits, and home security). This will ultimately help insurers (especially life insurance companies) remain competitive while delivering real-time solutions that are smartly priced and granular. IoT is going to result in a wave of rich data that can be fed to AI-based algorithms. This will mature the insurance space, shooting it head-first to the next age of insurance and delivering critical customer needs in the process.
So far, we’ve only considered the rise of non-physical insurance components (data, AI, deep learning, SaaS, and so forth) But, physical robotics will certainly cause a major disruption for insurers. In the not-so-distant future, physical robotics will be woven in the insurance equation. As self-driving cars slowly increase in adoption (27% of people currently think that they will be using self-driving cars by 2020), insurers have a new equation. Obviously, new channels of insurance are necessary to meet the rise of robotics, which is apparent across insurance channels (robotic medical equipment, robotic farming equipment, and so forth) The future of insurance must meet robotics head-on.
Finally, let’s touch on big data and data aggregation. The future of insurance relies heavily on open source data ecosystems, which will exist as a dual effort between private data aggregators and open-source data protocols. Data from IoT, AI, and robotics will be collected, stored, and distributed in cloud-based open-source systems (like blockchain.) This gives insurers equal access to critical data. And we aren’t talking a small amount of data. By 2023, IDC predicts a total of 163 zettabytes of data will be aggregated — or 163 trillion gigabytes. This data won’t just be used to determine; it will let insurers predict exact risk scenarios. In fact, 66% of analytic processes will be able to predict behavior instead of determine behavior by 2021.
The digital age of insurance is already here. SaaS, social media, big data, and AI analytics are disrupting the insurance industry across verticals. But the future holds an incredible amount of growth for predictive insurance. By leveraging powerful open-source data streams, mature algorithms, advanced AI, and blockchain protocols, insurers will be able to deliver granular packages to consumers based on advanced risk analytics, as well as IoT-sourced behavioral and biometric data.
Of course, the future also carries uncertainties. How will insurers address physical robotics and IoT adaptations? What is the site map of the new age? The brokers, insurers, suppliers, and financial intermediaries who figure out the answers to these questions will be the winners of the new age of insurance. The future of insurance is right around the corner, and savvy insurers are ready to adopt new technologies that help them deliver more customer-centric and reliable solutions.
Being prepared for the future is great, but, if you’re wondering what you can do TODAY, contact us. We can revolutionize your underwriting, rating, quoting, binding and issuing by using technology to make all of your processes smarter, more efficient, and more cost effective.