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Featured General Insurance Security

The insurance industry sits on a mountain of personal data – health records, driving habits, financial details. It’s the fuel for innovation in Insurtech, but without responsible use and robust security, it becomes a liability. Here’s a harsh reality. An eye-watering 37% of consumers have already walked away from companies due to data privacy concerns. And 81% believe how you handle their data is a direct reflection of how much you value them as a customer.

These statistics reflect a growing distrust. Policyholders are asking: how is my data being used? Is it secure? Does the company truly value me as a customer, or just my information?

With this in mind let’s examine why transparency and trust are paramount, and how prioritizing data security can become a competitive advantage in the Insurtech landscape.

The data privacy landscape today

Consumers today are more conscious than ever before about their data privacy – 69% report feeling more worried than ever about their personal information. This heightened awareness isn’t born in a vacuum. Recent years have seen high-profile data breaches like the Facebook-Cambridge Analytica scandal, where millions of users’ data were harvested without consent, the Equifax breach that exposed the sensitive information of 147 million people, and the Marriott International incident, which compromised the personal details of approximately 500 million guests. And popular documentaries like Netflix’s The Social Dilemma have peeled back the curtain on how our data is collected, used, and sometimes misused.

The result? Around 70% of adults globally are actively taking steps to protect their online privacy. They’re deleting unused accounts, tightening privacy settings, and demanding greater transparency from the companies they interact with. This shift in consumer behavior presents a stark reality for the insurance industry: data privacy isn’t just a regulatory hurdle, it’s a bridge of trust to your policyholders.

What types of data does the insurance & Insurtech industry collect?

The insurance and Insurtech industries collect a vast amount of data to accurately assess risk, set premiums, prevent fraud, and provide better services to their customers. This data is essential for creating tailored insurance products and for the efficient functioning of the industry.

Here’s a breakdown of the data Insurtech collects, and why it matters:

  • Personal information: Name, address, date of birth – the foundation for any insurance policy.
  • Financial data: Income, assets, credit scores – used to assess risk and determine premiums. It might also include property and asset information, including things like the square footage of your home, the year your car rolled off the lot, whether you have a security system, and so on.
  • Health information: Medical history, medications, lifestyle habits – crucial for health insurance and increasingly used for personalized wellness programs.
  • Driving habits: Telematics data (think connected car sensors) can track mileage, braking patterns, and even location – used for usage-based car insurance and potentially to incentivize safer driving.
  • Digital footprint: Browsing history, social media activity (with consent) – can provide insights into overall health, risk profile, and even potential safety hazards (like posting about extreme sports).
  • Behavioral data: This can include gym memberships, loyalty program participation, or even public records of traffic violations. This broader picture helps Insurtech create a more comprehensive risk assessment.
  • Claims history: Claims history can help insurance companies understand risk profiles and forecast potential future needs.
  • Geolocation data (with consent): Real-time location tracking (e.g., through telematics), travel patterns, and geographic risk factors (e.g., flood zones) help in risk assessment, underwriting accuracy, and providing location-based services.

Regulations alone aren’t enough

Insurance companies operate within a stringent regulatory framework designed to protect consumer data. For example, the Federal Gramm-Leach-Bliley Act (GLB) mandates that financial institutions (including insurers) must fully explain their information-sharing practices to customers and offer them the option to opt out of sharing their sensitive information. Similarly, the California Consumer Privacy Act (CCPA) provides California residents with the right to know what personal data is being collected about them, if it’s being sold (and to who), and the ability to access, delete, and opt out of the sale of their personal information. Then we have the Health Insurance Portability and Accountability Act (HIPAA) which sets national standards for the protection of sensitive patient health information.

All insurance companies will be aware of these regulations and more. However, compliance alone is not enough. It’s crucial for insurers to transparently communicate their data protection practices to build consumer trust. Let’s get into how in the next section.

Building trust through transparency: How to communicate your commitment to data privacy

Today, policyholders are demanding transparency and control over their personal data, and that means insurance companies need to do more to communicate how they handle consumer data. Failing to do this can result in consumers going to your competitors.

To effectively communicate your commitment to data privacy:

  • Be clear & concise: Don’t bury your data privacy policy in legalese. Craft clear, concise language that outlines what data you collect, why it’s necessary, and how it’s used.
  • Less is more: Resist the urge to become a data hoarder. Clearly define the minimum data required for each insurance product or service. This demonstrates respect for policyholders’ privacy and reduces the risk of exposure to a breach.
  • Data retention with a reason: Develop a data retention policy with clear timelines. Explain to policyholders how long you retain specific data types and the criteria for deletion. This builds trust and demonstrates responsible data management.
  • Education is key: Don’t underestimate the power of clear communication. Utilize blog posts, explainer videos, and even infographics to educate policyholders about data privacy practices. This empowers them to make informed choices and fosters a sense of partnership.

Lastly, we have cybersecurity. Collecting data allows for more accurate policies and fuels the development of innovative products, so it’s not something insurance companies want to give up. And let’s not forget, it benefits policyholders too. However, any data collected should be protected with stringent cybersecurity measures.

Insurance and Insurtech companies should prioritize advanced threat detection systems, implement the principle of least privilege (limiting user access to only essential data), and utilize firewalls and network segmentation to prevent unauthorized access. These measures not only prevent attacks but also limit the damage if one occurs.

Final thoughts

In today’s data-driven world, ignoring data privacy is a recipe for disaster. By prioritizing clear communication, responsible data practices, and top-notch security, Insurtechs can turn privacy concerns into a competitive advantage. The choice is clear: embrace data privacy or risk losing policyholders.

July 8, 2024
Cloud Computing Featured General Insurance

The insurance industry has always relied on data to perform its operations and sustain itself over the long term.

From underwriting data such as Know Your Customer (KYC) and vehicle information to claims data like accident details and investment data like financial forecasts, insurance is essentially a data-driven practice.

With the explosion of data in our increasingly connected world, the volume of information far exceeds human capacity to analyze it manually. Advanced technologies like big data, cloud computing, and artificial intelligence are poised to transform data into actionable insights that directly impact insurers’ decision-making. Quantum computing, however, will take this transformation to a new level, enabling organizations to process and analyze previously unimaginable amounts of data at unprecedented speeds.

By leveraging the principles of quantum mechanics like superposition and entanglement, quantum computing offers computational power far beyond the capabilities of classical computers. This leap in technology promises to revolutionize the insurance industry, providing more accurate risk assessments, optimized investment strategies, and enhanced fraud detection capabilities.

What is quantum computing?

Quantum computing is a type of advanced computing that utilizes the principles of quantum mechanics to process information. Unlike classical computers, which use bits (binary values of 0 or 1), quantum computers use qubits. Qubits can exist in a superposition state. This allows them to simultaneously represent both 0 and 1. Additionally, qubits can be entangled, where the state of one qubit can instantly affect the state of another, regardless of the distance between them.

Classical computers process information sequentially, which can be time-consuming for complex calculations. In contrast, quantum computers leverage the unique properties of qubits to perform multiple calculations simultaneously. This ability to process information in parallel allows quantum computers to solve problems that classical computers currently cannot handle.

For example, in healthcare, quantum computing can optimize treatment plans and accelerate drug discovery by analyzing vast datasets at unprecedented speeds.

Application of quantum computing in insurance

Risk assessment & pricing

Quantum computing can enhance risk assessment and pricing models. With its ability to analyze large datasets and perform intricate calculations, quantum computing allows insurers to develop more accurate and precise actuarial models.

This leads to better alignment between premiums and actual risk profiles, resulting in more competitive insurance policies.

Investment optimization

Quantum computing can revolutionize investment strategies in the insurance industry. By processing vast amounts of data and performing complex optimizations, quantum computers can help insurers make more informed investment decisions, maximizing returns while minimizing risks. Monte Carlo simulations are used to model components of project cash flow, accounting for uncertainty.

Fraud detection & claims processing

Quantum computing can play a crucial role in fraud detection and claims processing.

Quantum algorithms can analyze large datasets in real time, identifying patterns indicative of fraud. This enhances the speed and accuracy of claims processing, reducing fraudulent claims and saving insurers significant amounts of money.

Decision making & data analysis

Quantum computing’s ability to handle and analyze large-scale datasets efficiently can transform decision-making processes.

Quantum machine learning algorithms extract meaningful insights from complex datasets, enabling insurers to make better-informed decisions. This leads to improved risk prediction, customer segmentation, and personalized insurance offerings.

Final thoughts

While quantum computing holds great promise in the insurance industry, its power also poses significant cybersecurity threats.

Quantum computers’ potential to break current encryption standards could compromise online security, leading to increased cyber insurance claims due to heightened vulnerabilities in data protection and business continuity. This necessitates a major review of cyber insurance policies and the adoption of quantum-resistant encryption practices.

Add to that, quantum computing’s ability to process vast amounts of data quickly raises concerns about data privacy and the ethical use of sensitive information.

To harness the potential of quantum computing in insurance, organizations must prepare by exploring its applications and implications.

July 3, 2024
Automation Featured General Insurance

Since the rise of AI, AI-powered chatbots have transformed how insurance companies interact with their customers.

By utilizing sophisticated technologies like Natural Language Processing (NLP), Machine Learning (ML), and comprehensive backend integrations, these chatbots deliver highly efficient and personalized services. More importantly, these chatbots are integrated across various platforms, including Facebook Messenger, SMS, web interfaces, and mobile apps.

This multi-platform presence allows insurance companies to reach a broader audience, providing customers with the convenience of managing their insurance needs through their preferred communication channels.

How AI-powered chatbots work in insurance

To better understand how AI-powered chatbots work, it is essential to dissect their underlying technologies and understand their functions.

Key technologies & components

 1. Natural Language Processing: By processing the text input to identify the user’s intent and context, NLP facilitates accurate and contextually appropriate responses, thereby transforming human language into actionable data.

 2. Machine Learning: ML algorithms empower chatbots to learn from previous interactions by analyzing customer data. This improves their responses, helping to deliver tailored recommendations and solutions over time.

 3. Dialog management systems: These systems manage conversation flow, ensuring interactions are coherent and relevant by handling context switching and maintaining the conversation state.

 4. Backend integration: Chatbots connect to the insurer’s backend systems (like CRM, policy management, and claims processing systems) to retrieve and update information in real time, ensuring accurate and timely responses.

Integration with APIs

APIs, or Application Programming Interfaces, are defined sets of rules and protocols that enable different software applications to communicate and interact with each other seamlessly. They define the methods and data structures that developers can use to interact with an external service, software, or system.

Think of APIs as intermediaries that enable software to request and exchange information efficiently and securely. As intermediaries, they play the important function of interlinking several devices, data, software, and even users.

Examples of APIs that allow insurance companies to reach a wider audience include:

 1. Facebook Messenger API

Enables communication through Facebook’s messaging platform.

Example: Californian-based insurance start-up, Next insurance, uses Facebook Messenger to provide policy information, handle claims, and offer product recommendations.

Read more

 2. SMS integration:

Uses SMS gateways to communicate with customers who prefer text messaging.

Example: Geico offers policy information and claim status updates via SMS, catering to a wide customer base.

Read more

 3. Web chatbots:

Integrated into insurance company websites.

Example: Nationwide’s NORA, an ai-powered assistant on their website assists with policy inquiries, quotes, and claims processing.

Read more

 4. Mobile app integration:

Embedded within the insurer’s mobile application.

Example: Geico’s mobile app features an AI-powered chatbot for policy management, claims filing, and customer service.

Read more

Benefits of API integration

Wider reach: Integration with popular messaging platforms like WhatsApp and Facebook Messenger allows insurers to reach a broader audience. Customers can interact with the insurance company on platforms they already use.

Convenience: Customers can manage insurance-related tasks without leaving their preferred messaging apps, providing a seamless experience. Instant responses enhance customer service by significantly increasing both speed and efficiency.

Enhanced customer experience: Personalization and immediate assistance lead to higher customer satisfaction and loyalty. The familiar interfaces of messaging apps reduce the learning curve for customers.

Operational efficiency: Automating routine inquiries and tasks alleviates the workload on human staff. Real-time integration with backend systems ensures accurate and quick resolution of customer queries.

Looking forward

As AI-powered chatbots become integral in insurance, companies must prioritize data security, regulatory compliance, and seamless human-agent transitions.

Safeguarding customer data with robust security measures, adhering to evolving regulations, and ensuring smooth handoffs to human agents are essential for optimizing efficiency and preserving customer trust in chatbot interactions.

July 1, 2024
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
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