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Featured General Insurance

Our homes are getting smarter by the day, and it’s not just about dimming the lights with your voice. According to one study, 69% of US households already have at least one smart device. The leader of the pack? Video doorbells, with a cool 20% penetration rate in American homes.

These aren’t just gadgets; they’re technology with the potential to prevent disasters, deter crime, and even help you catch the package thief. But what does this mean for the home insurance sector? Let’s get into it.

What is smart home technology?

Put simply, smart home technology is the internet-connected devices that automate and remotely control features in your home, like lighting, thermostats, and security systems. And a lot of tech falls under smart home technology, including:

  • Video doorbells: See who’s at your door remotely and deter break-ins.
  • Smart thermostats: Automate heating and cooling for comfort and energy savings.
  • Water leak detectors: Prevent costly water damage by identifying leaks early.
  • Smart security systems: Control locks, lights, and cameras for enhanced home security. Some even eliminate physical keys and grant access remotely or through voice commands.
  • Air quality sensors: Monitor air quality and adjust thermostats or air purifiers for a healthier home.
  • Voice assistants: Control smart devices and access information hands-free.
  • Smart smoke & CO detectors: Receive alerts and monitor real-time safety hazards.
  • Smart plugs: Control any appliance remotely, schedule power on/off, and track energy consumption.

You likely have one of these devices already in your home, or perhaps one that isn’t listed above – like smart TVs. Many smart home studies don’t include them, mostly because they’re ubiquitous now (almost as common as a toaster these days) and their impact on, say, security or energy savings is minimal. While smart TVs can connect to the internet and offer streaming services, they don’t actively participate in automating or monitoring your home environment – the core function of most smart home tech.

However, you will notice that one other item on the list could fall into a similar category: voice assistants. So, why do smart TVs get ignored while voice assistants don’t? Well, while most people primarily use voice assistants to play music or ask, “Can dogs eat carrots?” while cooking with an eager puppy staring up at them, they can do much more. Namely, they can be used to control other smart home devices from security cameras and smart locks to smoke detectors and thermostats.

How does smart home tech impact home insurance premiums?

Smart home technology should, in theory, lower home insurance premiums. Here’s why: these devices enhance security and safety, reducing the likelihood of costly incidents like break-ins or fires. Both insurers and policyholders benefit from this. Homeowners enjoy increased security and potential savings, while insurers face fewer claims. Recognizing these advantages, some insurers now incorporate smart home technology into their plans. For example, American Family Insurance offers discounts for homes equipped with certain types of smart devices.

However, it doesn’t always pan out this way. In the UK, smart home-based insurance often costs more than traditional policies. The higher premiums account for the value of the installed tech itself. Consequently, many opt out, seeing it as an expensive add-on rather than a benefit. While the UK market differs from the US, this situation serves as a cautionary tale. It suggests potential hurdles for insurers who must balance tech costs with policy pricing.

The real benefits of smart home tech for insurance

Let’s drill a little further into the specifics. Smart home technology is transforming the insurance landscape, offering a range of benefits that can make homes safer, claims processing quicker, and insurance premiums more tailored. Here’s how:

  • Cost savings/discounts: Many insurance companies are now offering discounts for installing specific smart home devices. These incentives can help offset the initial cost of the technology while encouraging homeowners to adopt risk-reducing measures.
  • Faster claims processing: Accurate, real-time data from smart devices enables insurers to quickly assess and verify incidents.
  • Risk mitigation and prevention: Smart smoke detectors, water leak sensors, and smart security systems can proactively prevent disasters before they happen. By mitigating these risks, homeowners are less likely to file claims, which could lead to lower premiums over time.
  • Personalized premiums: By tracking usage patterns like energy consumption and security measures, insurers can create personalized risk assessments for each homeowner. This translates to premiums that accurately reflect your individual risk profile, potentially rewarding responsible behavior with lower costs.
  • Data collection and analysis: By anonymizing data from smart homes like occupancy patterns, appliance use, and even environmental conditions, insurers gain a clearer picture of overall risk. This translates to more accurate assessments and potentially lower premiums for everyone.
  • Carbon footprint reduction: Smart thermostats and other energy-efficient devices can not only reduce energy bills but also contribute to a lower carbon footprint for the home. While not a direct insurance benefit, being environmentally responsible is important for many policyholders.

Bonus benefit: One study found that in the UK, people are willing to pay more for a home with smart home technology. For homeowners, this means investing in smart devices could potentially increase the value of your home.

What are the considerations?

Smart home technology undoubtedly offers benefits to both insurers and homeowners, but that isn’t to say there aren’t important considerations at play here.

First, smart home technology gathers a lot of data, and many insurers want access to this data. This makes sense – the more information they have about your home and habits, the more accurately they can assess your risk profile. However, this data collection raises privacy concerns for many homeowners. The idea of insurers having access to information about your daily routines, energy consumption, and even when you’re away from home can feel intrusive.

Transparency is key. Insurers need to be upfront about what data they’re collecting, how they’re using it, and how they’re protecting it. Homeowners need to feel comfortable with the data exchange and understand how it benefits them. For example, clear communication about anonymization practices and data security measures can help build trust.

Similarly, insurers will need to expand their data centers to accommodate this influx of information and continue their investment in cybersecurity to ensure the safe and responsible handling of homeowner data.

Final thoughts

Smart home technology is revolutionizing the insurance industry. While the benefits are numerous – from faster claims processing to personalized premiums – there are considerations. Privacy concerns around data collection are paramount.

Ultimately, smart homes and policies can create a win-win situation for insurers and homeowners. By working together and addressing potential pitfalls, this partnership can lead to a safer, more cost-effective, and more secure future for everyone.

June 26, 2024
Automation Featured General Insurance

Today, we stand at the intersection of two groundbreaking technologies, Augmented Reality (AR) and Virtual Reality (VR), which are transforming how we perceive, navigate, and secure our future.

Imagine a world where insurance claims are assessed without ever stepping into a physical office, where risks are more accurately evaluated, and where customers fully understand their policies.

This is the future of insurance, driven by the advancements in VR and AR technologies.

Introduction to Virtual Reality & Augmented Reality

Virtual Reality (VR) places users within a digitally simulated environment. Depending on the device used, like the Sony PlayStation VR, users can immerse themselves in a virtual world, experiencing it through various senses such as sight, touch, and hearing.

VR headsets employ 3D stereoscopic projection to ensure complete immersion.

Augmented Reality (AR), on the other hand, overlays digital information onto the real world, enhancing users’ perception and interaction with their surroundings. AR can be accessed through devices like smartphones, tablets, and AR glasses, providing real-time data and visual enhancements.

AR gained mainstream popularity with the release of Pokémon Go, which became America’s highest-grossing game in 2016 and 2017 and achieved over 1 billion downloads worldwide.

Their impact across industries

For many years, Virtual Reality was primarily used in the entertainment industry, most commonly in games. However, with mixed reality devices like the Apple Vision Pro, which combine both AR and VR, more practical uses are being realized.

Today, diverse industries like aviation, medicine, and the military have practical applications for these technologies.

For instance, much of the training and onboarding for specialists and professionals in such sectors are conducted via simulators—virtual worlds—where trainees can experience real scenarios and situations, preparing them for real-world challenges.

In the insurance industry, we have only scratched the surface of exploring how these technologies can facilitate superior performance across multiple processes.

Advanced risk mitigation

Augmented Reality has developed sophisticated simulators that enhance risk mitigation strategies for both insurers and policyholders. Insurers can leverage these technologies to educate clients on reducing claim likelihood by demonstrating potential risks and preventive measures.

Asides that, these technologies enable the creation of comprehensive disaster management programs, allowing users to practice responses to various emergencies and thereby minimizing actual risks.

Expanding market reach

AR and VR revolutionize customer acquisition and retention by transcending traditional advertising methods. Virtual environments can simulate real-world risks, demonstrating the importance of insurance coverage in an engaging manner.

These enable insurers to reach a broader audience through interactive and immersive marketing campaigns, effectively conveying the benefits of their products and services.

Claims processing

The integration of AR in claims processing is poised to revolutionize the insurance sector by efficiency gains in speed and accuracy. Combined with the Internet of Things (IoT), these technologies can streamline the entire claims process.

AR enables insurers to assess damages virtually, facilitating quicker and more precise claims evaluations. This not only accelerates claim settlements but also enhances fraud detection capabilities, minimizing claim investigation costs.

Enhanced customer experience

Incorporating AR and VR into customer service promises significant improvements in communication and issue resolution.

Instead of traditional voice or video calls, Augmented Reality can allow company representatives to virtually be present with customers, offering a more immersive and interactive experience.

This approach enables representatives to better understand and address customer concerns, providing detailed insights and facilitating appropriate actions. The result is a higher level of customer service that enhances trust and satisfaction.

Real-life case studies

Liberty Mutual Insurance: Liberty Mutual uses car crash and breakdown simulations to educate and train both customers and staff. These simulations aim to improve preparedness and response times by offering realistic scenarios that replicate real-life incidents.

Allstate: Allstate employs virtual reality (VR) technology for training purposes, particularly for claim adjusters. VR provides immersive, realistic scenarios that allow adjusters to practice and refine their skills in a controlled environment.

USAA: USAA piloted an augmented reality (AR) app in 2018 that allows users to recognize cars on the street and access information about them in real time. The app, powered by Blippar’s car recognition technology, identifies the brand and model of any vehicle from the year 2000 onwards and provides details on purchase price, insurance costs, and similar vehicles for sale locally.

To summarize

The convergence of Augmented Reality (AR) and Virtual Reality (VR) marks a pivotal moment in the evolution of the insurance industry.

These technologies are not merely enhancing existing processes; they are fundamentally reshaping how insurers interact with customers, assess risks, and manage claims.

June 24, 2024
Automation Featured General Insurance

It has always been the goal of the insurance industry to anticipate and manage risk. Any inability to evaluate risk will eventually cost the insurer money. In a similar vein, insurers must remain vigilant about the procedures and actions that follow a disaster to prevent unmanageable costs.

To provide their clients with the appropriate coverage, insurers are constantly looking for better and more effective ways to predict and lessen the impact of risks. As the number of risks increases, how can insurers use technology to their advantage? Profitability is essential to their survival in this intensely competitive market.

Numerous risks impact a wide range of insurance verticals. Traditional risks like fire or theft are already adequately insured, but the risk environment is always changing because of wars as well as the sudden requirement to insure new areas such as the internet. New issues are arising as global temperatures rise. Thus, it makes sense that, according to two-thirds of experts (66%) extreme weather will be the most likely cause of a significant worldwide disaster by 2024. Recent research has demonstrated this. Although 2023 was the warmest year ever recorded, 2024 could break even more records. Insurance companies now must deal with the growing expenses of new risks, such the effects of extreme weather, and figure out better strategies to control these evolving risks.

To assist clients, prevent loss altogether, insurers can increase their capacity for knowledge and risk awareness by utilizing technology and data-driven insights. These are the top three areas where the insurance sector is being transformed by new, connected devices and proactive communications technologies.

Risk assessment using data from wearable devices

Health trackers and wearable technology are crucial tools for helping people achieve their wellness objectives. In the past, life and health insurers used basic physiological information to determine mortality risk, such as height, weight, and smoking status, to compute premiums. Devices connected to the Internet of Things (IoT) may now access a wide range of outputs, including blood pressure, heart rate, blood oxygen saturation, and activity and sleep metrics. Personalized life insurance plans based on a person’s lifestyle can be created using this rich, detailed data, and health measures can be utilized as extra inputs to continuously evaluate an individual’s mortality risk.

Using IoT data for personalized underwriting can provide more equitable and transparent pricing structures for policyholders. Customers may benefit from reduced premiums, for instance, if wearable technology tracks their more active lifestyles. Both the policyholder and the insurer gain from a tailored approach: the former encourages policyholders to better manage their own risk, while the latter provides incentives for the policyholder to behave in their own best interests.

Improving customer experience through effective first notice of loss

Within the established domain of auto insurance, Internet of Things (IoT)-enabled telematics devices, popularly referred to as “black boxes,” offer valuable insights into driver conduct and capture data on variables including speed, acceleration, braking, distance traveled, and time of day a vehicle is driven.

Telematics devices can be extremely helpful not just for GPS monitoring and driving feedback, but also for customer interactions, such as the critical “first notice of loss.” Black boxes can automatically detect and notify emergency services and the driver’s insurance company in the event of a traffic collision. This allows the insurer to take charge of an event before it becomes serious, as opposed to learning about it days later after a local tow truck driver has taken all the major decisions and basically ran the show. Simultaneously, this dynamic approach is clearly more beneficial for the client, offering a comforting feeling of control and support in an otherwise unsettling and strange circumstance.

Utilizing the gathered data also promotes safer driving practices, routine maintenance, and reduces the possibility of fraud. According to one study, keeping an eye on driving behavior can lower overall claims costs and decrease the number of claims by up to 50%. Telematics devices, when incorporated into an insurance policy, allow insurers to offer pay-per-mile, or usage-based insurance (UBI), tailored according to the driving patterns of the insured.

Weather alerts: A proactive approach to preventing losses

Numerous insurance risks are impacted by extreme weather. Effective communication with clients to offer up-to-date information and advice is advantageous for all sides, assisting policyholders in maintaining their safety, safeguarding their possessions, and minimizing damages. Insurers are now using contemporary technology to offer proactive communications that can advise clients to impending extreme weather conditions directly to their smart or mobile device.

In addition to posing a large financial risk to insurers, catastrophic weather disasters highlight the necessity of taking preemptive steps to foresee and lessen the impact on policyholders. Natural catastrophes are expected to cost insurers close to $95 billion in 2023 due to the growth in extreme weather occurrences, which range from destructive hurricanes to record-breaking wildfires.

If a big weather event is predicted to affect a policyholder, they can receive advice on staying safe as well as prior notice of notifications and alerts. Weather forecast data can be linked to policyholder addresses automatically, informing clients of only pertinent unfavorable conditions and providing advice on how to protect their properties and self. Emails informing clients of impending storms or emergency SMS texts informing policyholders of more serious local wildfire sightings can serve as basic forms of notification.

Striking the balance: Navigating empathy & risk

By utilizing IoT devices and seizing the opportunities presented by contemporary linked technologies, insurers can reduce financial losses and develop enduring relationships with policyholders that are based on proactive communications, openness, and personalization. In a period of uncertainty and change, those who leverage technology to its fullest potential will not only survive but prosper in the insurance industry, offering first-rate customer experiences with ease and efficiency using ever-more-granular data.

June 21, 2024
Featured General Insurance

The life insurance industry has long grappled with numerous challenges. Complex application processes, lengthy underwriting times, lack of personalization, and high costs have made life insurance products difficult to sell and even harder to understand.

However, the advent of advanced technologies is transforming the sector, providing innovative solutions to these persistent issues.

Here’s how insurers are harnessing technology to overcome these obstacles and enhance the customer experience.

Key challenges in life insurance

Complex & lengthy application processes

Traditional life insurance applications often involve extensive paperwork, invasive medical exams, and numerous questions, making the process cumbersome and time-consuming for applicants.

Inefficient underwriting

The underwriting process, which involves assessing risk and determining premiums, has historically been slow and labor-intensive. This leads to delays in policy issuance and frustration for customers.

Lack of personalization

Life insurance products have often been one-size-fits-all. This means that conventional products fail to cater to the unique needs and preferences of individual customers, resulting in less-than-optimal coverage.

High costs

The administrative burden and inefficiencies inherent in traditional insurance processes—like costly medical exams and data entry—contribute to higher costs for both insurers and policyholders.

According to the National Association of Insurance Commissioners (NAIC), administrative costs can account for approximately 10-15% of premiums in the life insurance sector.

Poor customer engagement

For many years, there has been limited interaction between insurers and policyholders, leading to low customer engagement and satisfaction.

This, in turn, has increased policy cancellation rates and reduced renewal rates, especially in the case of term insurance policies.

Insurtech solutions

While you can’t enthusiastically sell the idea of death—which, in essence, is what you are doing when selling life insurance—technology has made life insurance products easier to understand, more affordable, and tailor-made for each customer.

Most importantly, technology has revolutionized the industry by simplifying processes and enhancing the customer experience.

This transformation is made possible through:

 1. Artificial Intelligence & Machine Learning

Problem addressed: Inefficient underwriting & lengthy application processes

Solution: AI and machine learning algorithms are revolutionizing the underwriting process by analyzing vast amounts of data quickly and accurately. These technologies assess risk based on factors like medical history, lifestyle, and even genetic information, enabling insurers to offer personalized premiums and faster policy issuance.

Example: Haven Life Insurance uses AI to automate underwriting, allowing customers to receive term life insurance quotes and coverage decisions within minutes, without the need for medical exams.

 2. Wearable technology

Problem addressed: High costs & lack of personalization

Solution: Wearable devices like fitness trackers and smartwatches collect real-time health data, which insurers use to monitor the health and activity levels of policyholders. This data enables insurers to offer dynamic pricing models and reward healthy behaviors with premium discounts or other incentives, thereby reducing overall costs and encouraging healthier lifestyles.

Example: United Healthcare integrates wearable technology into its policies such as health and term life insurance, offering discounts and rewards to policyholders who meet certain fitness goals, promoting healthier living and reducing claims.

 3. Blockchain

Problem addressed: Lack of trust & poor customer engagement

Solution: Blockchain technology enhances transparency, security, and efficiency in the insurance process. It allows for the secure sharing of data between insurers, healthcare providers, and policyholders, reducing repetitive paperwork and ensuring data integrity. Additionally, smart contracts on the blockchain automate claims processing, making the entire process faster and more transparent.

Example: MetLife’s LumenLabs uses blockchain to enable instant verification of policyholder information and automated claims processing, reducing administrative overhead and speeding up payouts, which boosts customer satisfaction.

 4. Big Data & analytics

Problem addressed: Inefficient Underwriting and Lack of Personalization

Solution: Big data analytics allows insurers to analyze large datasets to identify patterns and trends that traditional methods might miss. This data-driven approach helps insurers better understand customer needs and behaviors, allowing for more accurate risk assessment and the development of tailored insurance products.

Example: John Hancock has integrated wearable technology into its life insurance products through its Vitality program. Customers can earn premium discounts and rewards by sharing health data from devices like FitBit and Apple Watch.

 5. Digital Platforms & mobile apps

Problem addressed: Poor customer engagement & complex application processes

Solution: Digital platforms and mobile apps provide customers with easy access to insurance services, from applying for coverage to managing policies and filing claims. These platforms enhance the customer experience by offering a seamless, user-friendly interface and 24/7 accessibility.

Example: Aetna’s mobile app, Aetna Mobile, allows policyholders to manage their health and insurance needs in one place, offering services like health checks, mental health support, and nutritional advice.

Conclusion

The integration of advanced technologies is transforming the life insurance industry, addressing long-standing challenges and creating new opportunities for growth sustainability. These innovations not only streamline processes and reduce costs but also enhance customer engagement, paving the way for a more dynamic and responsive insurance landscape.

As technology continues to evolve, the life insurance industry will undoubtedly see even more groundbreaking advancements, further improving the customer experience and closing the protection gap.

 

June 17, 2024
Automation Featured General Insurance

Today, most people interact with a chatbot several times a month, if not more. But if you went back twenty years or even ten years and said people today would often prefer to talk to a chatbot over a human agent, you’d get some raised eyebrows. The chatbots of old were janky, prone to misunderstanding, and often added to customer frustration rather than alleviating it.

Luckily, the chatbots and AI assistants of 2024 are leagues apart from their tech-dinosaur cousins. Advanced chatbots and AI assistants can mimic human agents, increasingly becoming indistinguishable from their human counterparts in the ways that matter—understanding context, being empathetic, and providing tailored responses.

However, they also offer some benefits that exceed what traditional human-staffed insurance call centers can offer. These AI-driven systems offer near-instant answers (even during peaks), 24/7 support, handle multiple queries simultaneously, and can learn from interactions to improve future responses.

Let’s delve into this further to see exactly why and how chatbots and AI assistants are revolutionizing the insurance sector.

Common pain points in insurance customer service

We’ve all experienced the annoyance of being put on hold, transferred from one agent to another, only to end up with unresolved issues. This happens in every industry but is especially frustrating in the insurance sector, where contacting customer service usually means something has gone wrong. When people encounter frustration during their customer service interactions, it only adds to this stress. With this in mind, here are some of the biggest pain points:

  • Long wait times and hold music: Few things are more irritating than being stuck on hold for extended periods, listening to repetitive music. This not only wastes valuable time but also sets the tone for a potentially negative interaction.
  • The transfer tango: Getting shuffled between different agents, each requiring you to re-explain your situation, is a surefire way to breed frustration. Inconsistent information or lack of knowledge transfer between agents further exacerbates the problem.
  • Lack of clarity and transparency: Insurance policies can be complex documents. Customers often struggle to understand their coverage details or the claims process. Without clear explanations and transparent communication, navigating an insurance issue becomes even more challenging.
  • Slow claim processing: When you need to file a claim, the last thing you want is a lengthy wait for a resolution. Inefficient processes and slow turnaround times can add significant stress to an already difficult situation.
  • Feeling undervalued: At the end of the day, customers simply want to feel heard and respected. Unhelpful or dismissive interactions with customer service representatives can leave policyholders feeling like a burden rather than a valued client.

Benefits & top use cases of chatbots & AI assistants

Both chatbots and AI assistants are becoming increasingly popular in the insurance sector, and although these terms are often used interchangeably, there are some key differences. While both are powered by AI, chatbots typically handle routine questions with pre-programmed responses. AI assistants are more sophisticated, using natural language processing and machine learning to understand complex requests and even hold conversations. Essentially, AI assistants are much more advanced chatbots. Still, they’re both capable of supporting the top use cases for the insurance sector.

Advising potential customers

Chatbots and AI assistants help potential customers by answering queries, providing information about policies, and comparing different insurance products. This is crucial as 74% of consumers use insurer websites to research policies and compare quotes before purchasing. These AI tools provide instant, accurate responses, ensuring potential customers have the information they need to make informed decisions.

Automating claims processing

AI assistants can streamline the claims process by guiding customers through the steps, collecting necessary documents, and providing updates on claim status. This reduces the need for human intervention, speeding up the process and reducing errors. This is particularly important considering that 53% of respondents find waiting too long for replies the most frustrating part of interacting with businesses.

Generating quotes

AI assistants can revolutionize quote generation by gathering customer information through conversation, analyzing vast amounts of data to assess risk, and providing real-time, personalized quotes tailored to the specific needs of the customer. This not only streamlines the process but also allows for a more accurate and efficient quote.

Managing insurance plans

Policyholders can use chatbots to manage their insurance plans, including updating personal information, adding or removing coverage, and checking policy details. This level of convenience is increasingly expected by customers, with 73% of buyers wanting websites to feature digital assistants for convenient interactions.

Facilitating insurance payments

AI assistants can facilitate payments by reminding customers of due dates, providing payment links, and even processing transactions securely.

In other words, AI assistants help eliminate the main sources of customer frustration while also making the process faster and more convenient – AI assistants can help customers feel valued and understood throughout their insurance journey.

Best practices for implementing chatbots & AI assistants

There are lots of potential chatbot and AI assistant options out there, so it can often be challenging to know where to look. Choosing the right model for your business needs is crucial. Start by selecting a chatbot that aligns with your customer service goals, like reducing wait times, improving resolution rates, or offering 24/7 support. You can also consider chatbots designed for lead generation or automating routine tasks to further enhance the customer experience. Integrate it with an AI knowledge base to ensure it can provide accurate and up-to-date information.

Next, make sure it allows for seamless hand-offs to human agents when needed. This ensures that complex issues are handled with the care and expertise only a human can provide. Equally important, ensure that you have robust encryption and privacy measures implemented. Customers need to trust that their information is safe.

Lastly, implement continuous improvement strategies. Regularly update your chatbot with new information and learn from interactions to improve its performance.

Wrapping up

Forget long hold times and frustrating transfers! Chatbots and AI assistants are transforming insurance customer service. These AI-powered tools deliver instant answers, 24/7 support, and even understand your situation. No more explaining things over and over. They can simplify tasks, manage plans, and even process claims. The future of insurance is here, and it’s both efficient and friendly.

 

June 7, 2024
Featured General Insurance

One of the most transformative impacts of insurtech is in the realm of microinsurance.

Insurtech plays a pivotal role in making insurance accessible and affordable to low-income populations and underserved markets.

According to the WHO, in 2021, about 4.5 billion people lacked full coverage for essential health services. Among them, 344 million were sinking deeper into extreme poverty due to unaffordability of such basic and important needs.

Understanding microinsurance

Microinsurance is designed to provide financial protection to individuals with low incomes often excluded from traditional insurance markets. It covers a range of risks, including health, life, agriculture, and property, offering smaller coverage amounts.

This also comes with the benefit of lower premiums that low-income households can afford.

The challenge with microinsurance has traditionally been its sustainability and reach, given the high administrative costs and the difficulty in reaching dispersed, low-income populations.

This is where insurtech comes in.

The role of insurtech in microinsurance

As we have seen in previous articles, insurtech—a term that combines “insurance” and “technology”—is revolutionizing traditional insurance practices by leveraging digital technologies to enhance efficiency, reduce costs, and improve customer experiences.

This can be seen in:

 1. Mobile technology

Mobile phones are ubiquitous even in low-income communities, making them an ideal medium for distributing microinsurance products.

Microinsurance providers use MNOs – mobile network operators – for policy issuance, premium collection, and claims processing, significantly reducing operational costs and making microinsurance viable in both the short and long term.

 2. Blockchain technology

Unlike conventional insurance, which usually sets high margins, microinsurance sustains itself with smaller margins but with a very large pool.

Blockchain can enhance transparency and trust in microinsurance by providing a secure and immutable ledger of transactions. This is particularly useful in preventing fraud and ensuring that claims are processed swiftly and accurately.

 3. Artificial Intelligence (AI) & machine learning

AI and machine learning algorithms can analyze vast amounts of data to assess risk more accurately and personalize insurance products. Such technologies can help design affordable insurance products tailored to the specific needs of low-income customers.

 4. Internet of Things (IoT)

IoT devices can provide real-time data that helps in better risk assessment and management. For example, in agricultural microinsurance, IoT sensors can monitor weather conditions and crop health, enabling more precise insurance coverage and quicker claim settlements.

 5. Drones

Drones are emerging as valuable tools in the microinsurance sector, especially in agriculture.

They can monitor crop health and growth conditions, offering detailed insights that improve risk assessment. Specifically, they can reach hard-to-access areas for monitoring and assessment by insurers, thereby minimizing administrative costs and saving time.

Examples of insurtech in microinsurance

Several U.S. insurance companies are at the forefront of deploying insurtech solutions for microinsurance:

Lemonade

While primarily known for renters and homeowners’ insurance, Lemonade’s AI-driven platform is a model for how technology can streamline insurance processes.

Their approach of using AI for policy management and claims processing can be adapted to microinsurance markets. For instance, Lemonade uses AI to assess claims based on photos of goods.

By minimizing administrative costs, micro insurers can offset operational expenses, thereby reducing premium rates in the long run.

Allianz

Through its subsidiary Allianz X, the company invests in insurtech startups focusing on underserved markets.

They have supported ventures like BIMA, which uses mobile technology to offer affordable microinsurance products in developing countries. The latter’s insurance products range from life and health insurance to personal accident coverage.

Ric Micro Parametric

Ric is actively transforming the U.S. parametric catastrophe insurance market through a strong commitment to innovation.

By utilizing parametric insurance models, Ric provides quick and efficient payouts based on predefined parameters like rainfall levels during major flooding events.

Final thoughts

Insurtech is playing a crucial role in expanding the reach and efficiency of microinsurance.

By harnessing mobile technology, blockchain, AI, and others, insurtech companies are overcoming traditional barriers and making insurance accessible to those most marginalized.

As these technologies continue to evolve, they promise to bring even greater innovations to the microinsurance sector, fostering financial inclusion and resilience among low-income populations.

June 7, 2024
Featured General Insurance Press Release

LenderDock Inc. is pleased to announce a partnership with National General Lender Services (NGLS), the financial services arm of National General Insurance, an Allstate Company. National General Lender Services (NGLS) is one of the largest mortgage servicing and insurance tracking companies in the country.

“National General has always been a very collaborative partner and this next step will mutually help us both deliver on each of our respective web-services strategy for the insurance and mortgage servicing industries,” said LenderDock CEO Frank Eubank.

The latest LenderDock connexAPI will provide NGLS instant and direct access to policy-related data in volume for a growing number of P&C insurance carriers in the U.S.  This new digital solution will drastically improve the alignment between the mortgage servicer and the insurance industry, driving more innovation and operational efficiencies.

The connexAPI will enhance the application of LenderDock’s verification-as-a-service insurance platform, which digitizes online policy coverage validation.  The API will bypass human processing to verify policy details more efficiently and more cost-effectively. 

About National General Lender Services

As the financial services arm of National General, NGLS directly support the mortgage lending and servicing industry with insurance tracking and lender-placed insurance (LPI) for properties within loan portfolios.

NGLS’s commitment is to deliver the highest level of quality service while enhancing the customer’s experience. They provide highly effective and compliant lender-placed insurance solutions and risk management services to mortgage lenders, mortgage servicers, and financial institutions.

About LenderDock

Located in Utah, LenderDock is the industry leader in automated lien holder management and online property and casualty insurance policy verification. The SaaS platform enables real-time electronic verification, management, and updating of policy-related data by banks, lenders, and other financial third parties.

May 31, 2024
Featured General Insurance Security

Now more than ever, insurance companies have become prime targets for cyber threats. Insurers handle vast amounts of sensitive data, making them attractive to cybercriminals.

Also, the increased attack surfaces from reliance on technology for efficient and seamless operations make insurers and others in their ecosystem—such as intermediaries, vendors, and policyholders—easier targets.

For insurers, having strong cybersecurity isn’t just about following the rules—it’s essential for protecting their business.

This article looks at specific cybersecurity strategies to help insurance companies protect their assets, reputation, and customer trust.

The impact of cyber risks

Cyber risks pose significant financial challenges to insurance companies, often resulting in a surge of claims related to breaches, ransomware attacks, and other cyber-related damages. This can substantially increase the financial burden on insurers due to higher claims payouts.

Additionally, insurers that cover ransomware payments may face huge financial demands. Even if they don’t cover such payments, they still incur high costs from legal battles and recovery efforts.

Cyber attacks can also disrupt operational activities, leading to lost revenue and increased costs associated with remediation and recovery.

The dynamic nature of cyber threats complicates underwriting risks for insurers. As mentioned earlier, insurers become prime targets for cyber attacks because they hold sensitive customer data. Data breaches can expose this confidential information, leading to regulatory fines and a significant loss of customer trust.

Breaches can severely impact an insurer’s reputation, making it difficult to attract and retain customers.

Cybersecurity solutions for insurers

 1. Advanced threat detection & response

Insurance companies must stay ahead of sophisticated cyber threats by employing advanced threat detection and response systems. These systems utilize artificial intelligence and machine learning to identify and mitigate potential threats in real time.

CrowdStrike 

CrowdStrike’s Falcon platform is renowned for its next-generation endpoint protection, offering real-time threat detection and response capabilities. By leveraging AI-driven analytics, CrowdStrike helps insurance companies detect threats swiftly and minimize potential damage.

 2. Data encryption & protection

Ensuring that sensitive customer data is encrypted both at rest and in transit is crucial for preventing unauthorized access and breaches. Encryption transforms data into a secure format that can only be deciphered by authorized parties.

Symantec (now part of Broadcom Inc.)

Symantec’s Data Loss Prevention (DLP) solutions provide robust encryption and data protection tools. These solutions help insurance companies safeguard sensitive information, ensuring compliance with regulatory standards and protecting against data breaches.

 3. Identity & access management (IAM)

Identity and Access Management solutions control who has access to what information within an organization. By implementing strong IAM protocols, insurance companies can ensure that only authorized personnel have access to sensitive data and systems.

Okta 

Okta’s Identity Cloud offers comprehensive IAM solutions, including single sign-on (SSO), multi-factor authentication (MFA), and lifecycle management. Okta enables insurance companies to manage user identities securely and streamline access to critical applications.

 4. Security information & event management (SIEM)

SIEM systems aggregate and analyze activity from various sources across the IT infrastructure, providing a centralized view of security events. This enables insurance companies to detect and respond to incidents more effectively.

Splunk

Splunk’s SIEM platform offers real-time monitoring, advanced analytics, and automated response capabilities. By integrating data from multiple sources, Splunk helps insurance companies gain comprehensive visibility into their security posture and respond to incidents swiftly.

 5. Cloud security

As insurance companies migrate to cloud environments, ensuring the security of cloud-based applications and data is paramount. Cloud security solutions protect against threats specific to cloud infrastructure and services.

Palo Alto Networks

Palo Alto Networks’ Prisma Cloud provides comprehensive cloud security, covering infrastructure, applications, data, and access. It helps insurance companies secure their cloud environments, ensuring compliance and protecting against cyber threats.

Bottom line

For insurance companies, investing in robust cybersecurity solutions is not just about protecting data but also about maintaining customer trust and ensuring regulatory compliance. By partnering with industry-leading cybersecurity firms like CrowdStrike, Symantec, and many others, insurance companies can fortify their defenses against an ever-evolving cyber threat landscape.

Implementing these solutions helps safeguard sensitive information, ensuring the continuity and integrity of business operations in the digital age.

May 31, 2024
Featured General Insurance Security

The Insurtech industry is revolutionizing insurance with technology, offering faster, smarter services that benefit everyone. Thanks to Insurtech companies, customers today enjoy instant claims processing, laser-fast customer service, and personalized policies. Insurers get real-time data insights that further fuel innovation. But with these advancements come new risks.

Insurtech companies are a prime target for cybercriminals. Why? Because they house vast amounts of sensitive personal and financial data. Protecting this information isn’t just a technical necessity—it’s essential for maintaining trust and integrity, both for customers and clients, but also for the industry. With this in mind, let’s explore cybersecurity risks and solutions for the Insurtech industry in 2024 and beyond.

Cybersecurity risks

Data breaches

In a data breach, unauthorized individuals (hackers) gain access to sensitive, confidential information. Data breaches are rife. For example, insurance broker Keenan & Associates suffered a major data breach in 2023, impacting 1.5M individuals. And back in January this year, life and health insurance giant Washington National Insurance Company fell victim to a SIM-swapping attack that saw over 20,000 people affected. More generally, annual data breaches in the US have increased more than threefold since 2012, while the average cost to US businesses has surged by 60%.

When it comes to data breaches, not all targets are equal, although all industries are impacted. For example, the industry that suffers the most data breaches is IT, software, and tech services. This may surprise some people because you’d expect companies in the tech sector to employ stringent cybersecurity measures. The truth is, that many companies are committed to cybersecurity, but tech companies, including Insurtech companies, are such a lucrative target that robust and quality cybersecurity measures are paramount.

It’s important to note that the term data breach specifically refers to the exposure or theft of data itself, but there are many methods through which data can be stolen, and each presents unique risks. Let’s look at some of the methods that result in a data breach.

Ransomware attacks

Ransomware attacks, where malicious software encrypts a company’s data and demands payment for its release, are one of the primary causes of data breaches. Ransomware attacks can bring a company’s operations to a standstill, leading to financial losses and data theft. For Insurtech companies, the consequences are severe: lost revenue, compromised sensitive information, and damaged client trust. Shockingly, 20% of the costs from ransomware attacks stem from the blow to a company’s reputation.

The most common entry point for ransomware attacks is phishing, which brings us to our next risk.

Phishing and insider threats

Phishing involves deceptive emails or messages that trick employees into revealing sensitive information or clicking on malicious links. For example, an employee might receive an email claiming to be from the CEO, urging them to act quickly on a fake invoice. These messages often create a sense of urgency, prompting hasty actions. Insider threats, whether intentional or accidental, pose additional risks. Employees with access to sensitive data can inadvertently or deliberately cause breaches.

Third-party vulnerabilities

Insurtech companies often rely on third-party vendors, which can introduce significant security risks. Vendors may have access to sensitive data and systems, creating potential entry points for cybercriminals. Many companies also use open-source code, which, while beneficial, can contain vulnerabilities. If hackers find these vulnerabilities, they can potentially access countless different software systems.

Threats in a tech-fueled world

One of the more pressing concerns today is how increasingly powerful software and systems are shaping the cybercrime industry. Cybercriminals are now using AI to craft scarily convincing phishing emails, making it harder to rely on traditional red flags like spelling and grammar errors.

Similarly, the rise of cybercrime-as-a-service has changed the landscape. Cybercriminals now offer ransomware software to aspiring hackers who may not be tech-savvy, for a monthly fee. This lowers the bar for entry, allowing more people to engage in cybercrime. The combination of AI-enhanced phishing and accessible cybercrime tools means companies must be more vigilant than ever in their cybersecurity efforts.

Solutions – combating cybersecurity risks in Insurtech

So, we’ve covered the risks, but how do Insurtech companies go about combating them? Let’s look.

  • Advanced encryption: Implement robust encryption methods for protecting sensitive data both at rest and in transit. Use strong encryption standards like AES-256 to ensure that intercepted data remains unreadable without the correct decryption keys.
  • Multi-Factor Authentication (MFA): Implement MFA to add an extra layer of security by requiring multiple forms of verification before accessing sensitive systems. This reduces the risk of unauthorized access, even if passwords are compromised.
  • Regular security audits and penetration testing: Conduct regular security audits and penetration testing to identify and address vulnerabilities proactively. Comprehensive assessments help find and fix security gaps, keeping the company ahead of potential threats.
  • Employee training and awareness: Regular training sessions for employees help them recognize phishing attempts and other cyber threats. Emphasize the importance of following security protocols and reporting suspicious activities to create a well-informed and vigilant workforce.
  • Incident response planning: Develop and maintain a robust incident response plan outlining steps to take immediately after a breach is detected, including containment, eradication, and recovery processes. Regularly update and test the plan to ensure the team is prepared for an effective response.
  • Stringent access control: Employ the principle of least privilege, where users only have access to the systems necessary to perform their jobs. This massively limits what data can leak during a phishing attack.
  • Cybersecurity insurance: Invest in cybersecurity insurance to mitigate the financial impact of a cyber-attack. This insurance covers costs associated with data breaches, ransomware attacks, and other incidents, providing access to specialized response teams and resources for quicker recovery.

Wrapping up

In today’s hostile cyber environment, Insurtech companies are prime targets for attacks. Robust cybersecurity isn’t optional—it’s a must. By taking deliberate measures like advanced encryption, multi-factor authentication, and regular security audits, companies can protect their systems and keep sensitive data safe from malicious actors.

 

May 29, 2024
Business Featured General Insurance

The workforce isn’t what it was a few years ago. The adoption of remote work arrangements and the creation of innovative technology to optimize procedures have resulted in increased prospects and efficaciousness in recent times.

This is particularly true in the insurance sector, where technology has improved client experiences by streamlining the processing of claims and making it more individualized. Although some contend that technology—more especially, artificial intelligence—is displacing workers, technology helps those in the IT industry find new career paths and lessens burnout.

Early career programs for young professionals are highly valued in the insurance business, and the sector has shown a readiness to accept talent that has chosen an atypical career path. Young workers just entering the profession may find that their life experience, license, and proactive approach assists them in landing internships, independent contractor positions, and apprenticeships.

Employers are aggressively seeking professionals and recent industry newcomers with pre-existing technological skills due to the growing need for digital talent in the insurance sector.

Although there is a steep learning curve, the program offers young professionals a highly sought-after skill set and proof of their technical proficiency that can be utilized by any business. Digital natives acquire proficiency in these intricate systems fast, and their exposure to them refines their critical thinking abilities. It also enables people to be vital contributors to the suggestions for enhancements and innovations to these systems.

Any area may eventually experience burnout but call center workers in the insurance industry are particularly susceptible to it. When consumers deal with issues like illness, accidents, damage to their homes, and even the loss of a loved one, these staff members serve as their primary point of contact.

AI implementation in this segment of the insurance business is a potential remedy for call center employee turnover and fatigue. Employees at contact centers can focus on providing better customer service by using AI to help reduce some of the more laborious aspects of their employment.

Employing AI throughout a call center might also make burnout more apparent to managers, as underperforming staff members may generally go unnoticed. Machine learning algorithms can notify management when an employee is having difficulties and recommend a suitable resolution. In the contact center example, it may be as easy as proposing that the worker take a wellness break or take the remainder of the day off, or it could be more complex like advising that the worker get trained for a particular action that is causing them problems. Everyone may benefit from the inclusion of AI in the workforce.

Short-term benefits include an enhanced workday for agents, more task comfort, and a positive employer impression. From a management perspective, this technology can not only provide enhanced insight into worker well-being but also streamline the process of tracking it, potentially minimizing employee attrition before it becomes noticeable to people. Over time, operational procedures across the employee lifecycle can be strengthened with the use of data collected from burnout reduction initiatives.

May 28, 2024
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