Another year of big talk in the insurance industry surrounding new technology, and the need to innovate and evolve, has come and gone. Companies continue to modernize (some all too slowly, however), improve customer experiences and increase product offerings courtesy of analytics and mobile technology.
At INGUARD, we’ve always geeked out over next-generation technology and the possibilities it presents in insurance—to improve product, pricing and processes, but also experiences and protection for our clients. We love how technology better produces outcomes for firms and customers: Big Data gives us more insight than ever. Social media offers new customer communication channels and transparency. And mobile apps offer consumers faster, better service.
But these efforts don’t go far enough. Insurance can—and must—do more with advanced technology. We’re keeping tabs on a few game-changing tools that we believe could utterly transform the industry: drones, the Internet of Things (IoT) and artificial intelligence (AI).
This holiday season, we challenge the industry’s thought leaders and practitioners to heavily invest in these technologies to fundamentally improve how insurance works.
Autonomous aircraft are cleared to land in a backyard near you. Drones have already invaded retail and entertainment. And 2015 saw even greater strides toward full commercial usage, which should seriously impact how insurance does business.
New FAA regulations have encouraged Allstate, along with a consortium of companies, to further investigate how drones might aid claims assessment. This is great news, but we can’t wait to see insurers go even further in 2016.
Drones have the potential to quickly, accurately and safely assess property claims with little human involvement. As a result, consumers receive faster claims processing, even in remote or challenging areas. Insurers could save millions by deploying drones instead of people, and deliver more streamlined claims service. Drone usage would also make it safer to perform claims adjustment work in natural disaster zones.
Imagine if a drone could be dispatched automatically any time a customer filed a claim within a certain geographical area. While the drone travels, adjusters are able to discuss details with the customer and begin assessing the situation remotely. Once it arrives, the drone can photograph the area in any way the adjusters require or in ways adjusters can’t, providing near real-time claims assessment. The customer receives their claim as fast as the insurer can process the information.
Now that sounds like next-generation insurance.
2. Internet of Things
The Internet of Things (IoT) is the term for the connected sensors that bring our homes, cars and workplaces online. Each IoT-enabled device, machine or appliance connects to the Internet and other devices to revolutionize how life, work and play happen. For instance, a refrigerator could automatically order your favorite food when it recognizes the supply is low or depleted. Or, a thermostat could text you on an unseasonably warm day to ask for further cooling instructions. There are even already water detectors that alert you when consumption spikes.
This technology makes it possible to offer discounted rates and targeted products based on data from smart homes, automobiles and commercial facilities. Insurers already offer usage-based insurance for cars. But the possibilities are even more thrilling when the more than 50 billion devices come online by 2020, according to Cisco.
Related article: Smart Homes, Smarter Insurance [Free Ebook]
Eventually, health insurance rates might depend on what your smart refrigerator says you buy or your wearable fitness band says you do. Homes could prevent risk events by turning off malfunctioning smart valves or electrical systems. And businesses might secure better rates based on smart machines with exceptional safety or performance records.
3. Artificial Intelligence
The term “artificial intelligence” covers a wide spectrum of applications. But you see one of them everyday: AI is behind the algorithms that power Amazon and Netflix recommendations. These algorithms analyze past behavioral data to predict what you might want to buy or watch next, then they teach themselves to better understand your preferences.
Think of the possibilities AI presents for insurance. Products could be perfectly chosen for each consumer before they walk in the door. Time-to-sale rates would plummet dramatically since AI would do most of the consultation. Consumers would buy more appropriate products because machine learning uses their past purchases to highlight coverage they didn’t know they needed.
Even stronger types of AI are used to diagnose health conditions better than doctors courtesy of IBM’s Watson supercomputer. It’s also used to predict the weather and pilot self-driving cars. All three applications could profoundly impact how insurance is assessed, written and sold. In fact, AI is such a game-changer, we think carriers should be exploring options right now to build or buy these machine learning capabilities and incorporate them into their offerings.
Those who don’t might just end up like an analog alarm clock in the age of the iPhone: obsolete.
What technologies are on your holiday wishlist for the insurance industry to adopt? Feel free to respond with your thoughts in the comments section below.
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