How Will The Insurance Industry Evolve?
Insurance is a sector that’s been hit hard by the Digital Revolution. Online services now give customers more choice and transparency than ever before, making it harder for traditional providers to compete. While traditional insurers have struggled to compete with online businesses, new players have emerged and thrived in this environment. These businesses often use technology as a key differentiator, rather than focusing on protecting their brand image through advertising or marketing alone. So what does the future of insurance look like? Let’s take a closer look at what the biggest players are planning to do.
Car insurance policies are one of the most widely sold types of insurance in the UK with pruducts ranging from short term policies lasting for just a few days, to policies covering specialised groups such as, for example, drivers with health issues, or insurance for drivers simply looking for the cheapest car insurance policy.
To remain competitive, many insurance providers have recently invested in automated claims processes, as well as partnering with telematics providers to offer more customized policies based on risk factors such as driving style.
Some car insurance companies are even considering AI-powered chatbots to help customers manage their policies. In addition, most car insurance companies offer their services online, making it easier than ever for consumers to shop around for the most cost-effective policy for their needs.
Blockchain technology has been explored for a wide variety of applications and industries, but few have been as bold as exploring its potential for the insurance industry. It’s estimated that blockchains could save the insurance industry between $20 billion and $40 billion annually by 2022. The potential cost savings in the insurance industry are derived from the fact that blockchain transactions are immutable, or unchangeable. This could reduce the number of claims that are denied because of false information. With the current systems in place, false information is often undetected and incurs significant losses for insurers. By storing data on a blockchain, the information cannot be deleted or modified without significant effort.
This will significantly reduce the number of fraudulent claims. These cost savings would likely be passed on to consumers in the form of lower premiums. The implementation of blockchain also opens up a number of other possibilities. For example, it allows for the creation of smart contracts, which could significantly reduce legal costs for companies.
The way insurers market their products has changed significantly in recent years. Customers are now often targeted with personalized offers based on their risk factors, and online providers have made it easier than ever to buy a policy online. In fact, many insurance providers now offer instant online quotes to help customers find the best policy for their needs.
Digital platforms have also opened up new ways for consumers to interact with their insurance providers. For example, customers can now often use social media platforms to get advice from expert insurers, or share information about incidents with their fellow policyholders. Digital platforms have also made it easier for customers to file claims, giving them 24/7 access to their insurer. Many insurers have also changed the way they calculate risk, making it easier for young drivers to get coverage.
In the future, expect direct marketing to become even more personalised. Insurers might use more data about customers, including internet behaviour and social media activities, to make offers that are more relevant to their individual needs.
Another way that insurers can compete with online services is through the use of electronic contracts. Traditionally, consumers must go to the insurance company’s office and sign a contract with a representative. The next time they make a claim they’ll need to provide the original contract and a copy of the signed contract to prove they have the right to the payment. With electronic contracts, consumers sign a digital contract online and receive confirmation by email. They can also simply click a link in the email to sign the contract. This reduces the number of trips to the office. Digital contracts are also stored by the insurance company in an electronic format, making it easy for the representatives to access them when a claim is made. When the claim is approved, the company can send a digital copy of the payment to the consumer.
Emerging Technology in Insurance
Robo-advisors are online services that provide financial advice, often for a low cost. An oracle, on the other hand, verifies data and claims in an ecosystem. The insurance industry is exploring the use of these technologies to provide better services to their customers. For example, a robo-advisor could monitor a person’s health, their driving patterns and other factors that are relevant to their insurance rates. It could then adjust their rates if they begin to exhibit unsafe driving patterns or if they have a significant health event. This would allow insurers to provide better services at a lower cost. There are concerns, however, that these types of services could unfairly penalize people that have a lower income.
GEICO, one of the largest insurance providers in the USA, is using Robo-Advisor technology to offer customers more personalized insurance advice. Customers can answer a few questions about their current insurance policies, and GEICO’s Robo-Advisor will then recommend ways to save money on insurance. GEICO customers can also use the technology to compare their current policies with other providers and find out if they can save money by switching. The technology has helped GEICO to expand its reach to new audiences, including customers who may be daunted by the idea of visiting a physical insurance office or dealing with a broker over the phone.
There is no equivalent here in Britain yet, but a number of major insurers are thought to be looking into it.
Oracle Smart Contracts
Oracles are third-party entities that provide trusted data to smart contracts, essentially acting as the middleman between the blockchain and the outside world. In the insurance industry, oracles can be used to verify and authenticate data, such as medical records, weather forecasts, and flight schedules, to trigger insurance payouts. For example, an oracle could be used to determine whether a natural disaster, such as a hurricane, has caused enough damage to trigger a payout. Oracle Smart Contracts are customized contracts based on blockchain technology. They can be used to automate the insurance claims process by triggering payouts as soon as a specific event occurs. This helps to reduce insurance fraud and speed up the claims process, making it easier for policyholders to receive the payouts they are entitled to.
Insurance was once a simple business. Policyholders paid an annual premium and, in return, the insurer agreed to pay them a certain amount if they became sick, had an accident or experienced some other loss. Today, it’s a complex business, with many different types of insurance available. In order to thrive in this environment, insurance companies have to be nimble, willing to explore new technologies and provide the best services to their customers.
The future of insurance looks very different from the past. It is bound to become even more technologically advanced in the years to come.