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How the Digital World Is Transforming Insurance Businesses

Jason Hargraves
Jason Hargraves

Customers have grown accustomed to an on-demand culture, and insurers need to keep up.

The insurance industry is in the midst of a great digital transformation, thanks to advances in technology. As insurers rethink their organizational processes, consumers stand to benefit from an enhanced customer experience that ultimately offers better choices and lower prices. 

More customer data means better decision making

In the past, customers have primarily engaged with their auto insurer on a reactive basis – in response to a policy renewal or a claim made as a result of an accident. Today, the ability to gather and analyze data using technology like artificial intelligence means insurers can better predict customer behavior through a much richer customer profile. This helps companies better manage risk and improve communications with customers.

Telematics is one area in which digital interaction has allowed insurers to be more proactive with customers. You may have heard of OnStar, the prototype for telematics – a crash-resistant black box that receives wireless information. Telematics provides greater insight into driver behavior such as how fast people are driving and who is more likely to accelerate rapidly or brake suddenly. For businesses, this transparency has created discounts for the on-staff drivers they insure.

As greater industry-wide adoption of telematics occurs among consumers, tracking individual driving behavior will benefit all policyholders, not just businesses who hire drivers, by way of discounts and personalized incentives.  

New services for consumers means more options

Technology is also changing how consumers purchase insurance. According to Let’s Talk Payments, one of the top insurance technology trends for 2017 is a growing marketplace model in which carriers will no longer work in silos. Instead, companies will need to collaborate with third parties in order to offer consumers the best products.

As consumers continue to demand greater accessibility, flexibility and transparency in other insurance products, insurers will need to expand their service offerings to provide innovative solutions. We saw this happen with travel insurance. Consumers have the option of purchasing flight insurance at the click of a button when booking their flight online. This new service blazed the path for other types of insurance to follow.

Greater collaboration and automation means reduced costs

Not all services are as easy to fit into the same digital model. For example, the complexities of retirement planning require a much higher degree of consultation. That’s why insurers are on a quest to strike that perfect balance between technology and human interaction.

To find the right mix, insurance companies are incorporating algorithm-based robo-technology solutions to expand customer relationships. In leveraging robo-advice in a hybrid model, companies can choose which interactions are best face-to-face and which can best be addressed digitally.

Companies that have implemented a hybrid-approach report higher quality discussions with customers that result in more personalized, preventative, lower-risk solutions. These cost-saving efficiencies are then passed to consumers through reduced rates.

New startups are emerging with innovative solutions

In response to consumer demand, insurance tech startups are forcing traditional insurance companies to rethink their outdated processes through increased competition. Here are a few examples.

  • Lapetus is using facial recognition technology to determine life insurance rates. Consumers send in a selfie which is analyzed to evaluate how healthy you are.  
  • The Brolly app is a self-described “personal insurance concierge” that uses artificial intelligence to provide personalized service, gadget, travel, home, and motor insurance.
  • Trov, an on-demand insurance provider, allows customers to customize their insurance needs. Through the app, customers can identify from an online list of items which they want protected. Claims can be submitted via text messages.
  • UK-based Aviva is reducing repetitive tasks with AI technology, resulting in up to 15 times greater productivity.
  • Startups like Claimable, a claims management software, are helping insurers save time and money through automation. This also helps identify fraudulent claims – estimated at $80 billion a year according to the Coalition Against Insurance Fraud.

As the insurance industry continues to adopt automation, there will be casualties as manual jobs are eliminated. But the overall cost savings to insurers and consumers is poised to outweigh the growing pains along the way.
















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Jason Hargraves
Jason Hargraves,
business.com Writer
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Jason Hargraves is the managing editor of insuranceQuotes.com—which publishes in-depth studies, data and analysis related to auto, home, health, life and business insurance—where he studies the insurance industry in order to direct and oversee the management of editorial content that provides trusted tips, advice and insights for consumers. A veteran reporter, editor and content creator, Jason has covered business, personal finance and consumer trends at major daily newspapers and consumer-driven publications, including The Houston Chronicle, The Washington Times and Angie’s List. A native Texan, Jason lives in Austin, where insuranceQuotes.com is based.