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How tech is transforming the insurance industry

30/07/19

The insurance industry has been going through an immense period of transformation in recent years. Digital transformation is changing the face of almost every industry and there’s been a sharp increase in innovation around Insurtech and Fintech. So how do we know which ideas are commercially viable and which ones to let pass us by?

With such a wide and varied industry there’s a lot of competition, so watching the way the new technology is adopted and searching for patterns can be a great indication of how the industry is shifting. Here are some of the key tech trends from recent years that we believe are likely to revolutionise the insurance industry in the near future.

Blockchain

Security and data protection is essential in insurance and involves dealing with enormous databases containing everything from personal details, right down to the contents and value of somebody's home. So when blockchain came on the scene in 2008, claiming to be unhackable, it quickly became the hottest new trend to explore. The decentralised nature of blockchain means that a single breach of a system is not enough to acquire usable data. We're still yet to see mass implementation of blockchain, as it would require a fundamental overhaul of database systems. So, if it’s to succeed on a large scale, businesses will need to start making significant investments. However, with the coming of quantum computing, the question now is whether or not blockchain is as invincible as we think.

Verdict: We’re still in the exploratory phase of this technology, but it has the potential to reinvent business if it’s successful.

Smart homes

Home security systems have been increasingly popular amongst homeowners in recent years, and include everything from motion detectors to security cameras, video doorbells to panic buttons, and wireless keys to security lights. More people than ever are now installing video security in their home and having better control over their house while out and about. So how is this affecting the way they are insured? The people adopting this technology are savvy and aware, and are looking to get value out of their technological investments. We’ve already seen the switch to discounted insurance for car drivers with dashcams and smartphones that record safer driving habits. Now, home owners have similar expectations and insurance companies are being challenged to keep up. They need to start taking advantage of less risky homes with motion activated cameras, remote locking doors and straighteners that can be switched off from a smartphone.

Verdict: Awareness of this kind of tech and the range of affordable items on the market has rapidly increased in the past two years. It’s definitely time that insurance companies took this tech seriously.

Big Data

A successful business needs to be catering to each customer's needs. The question is, how can the insurance industry use the influx of data to add value to its offering? Since, prevention is better than cure, the best way for an insurance firm to save money is to avoid payout situations and keep customers satisfied. Companies need to be innovative, discovering what data they can gain access to and how they can tailor their offering based on available data. Similar to smart homes, this has huge potential for tailoring policies to each customer, but the benefits to the company are there too.

For insurance companies, being able to assess a claim and processing elements of it automatically, before an operator has to intervene can rapidly speed up the process. It also helps them to identify their most effective policies, and what makes them effective, giving them a better idea of where to focus their marketing. Given enough time, patterns form in customers’ data and companies can use this information to communicate and manage customer relationships with people who, for example, might be showing signs of leaving their current policy.

Verdict: This one is crucial. Not only in terms of making claims more efficient and offering more tailored products to customers, but also in helping insurance companies to avoid unnecessary costs.

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