How New Technology Will Shake Up the Future of the Insurance Industry

By David Lundgren

The insurance industry is starting to embrace modernization, shifting from hands-on manual efforts to an automated digital approach with the potential to unlock millions in value. We’re on the cusp of a technological revolution where new insurtech advancements are starting to transform and disrupt this traditional industry, becoming the standard for productivity and business growth industry wide.

Integration of conventional underwriting and actuarial teams and new insurtech methods will give rise to newer models and revenue streams and higher profitability, all while reducing operational costs. As regulated as insurance is, taking advantage of emerging technology trends will allow companies to differentiate themselves from competitors, providing a fresh approach to their customers and market opportunities in a time where change is happening faster than ever before.

Transforming Data Preparation

Data preparation and management are the two most critical and demanding data-focused concerns that stand in the way of companies making timely and important decisions around profitability and growth strategies. The current process relies on teams of hard to find, highly skilled experts to manually process and decipher data from various spreadsheets, external sources and internal systems across the company. These manual methods take time, often getting data and insights to decision makers months behind when it could be useful which makes it difficult to obtain new business or fully process existing business.

Across the industry, insurance companies tend to only be able to process 20-30% of their monthly submissions simply due to the lack of manpower. On top of that, companies must make quick decisions to outpace their competitors, adapt to market dynamics and respond to the demands of customers and distribution channels. Technology allows the preparation and analytics components to be vastly expedited, completing approximately 70-80% of submissions – making these positions much more appealing to newer talent.

New data management platforms are bringing the insurance industry into the modern age by simplifying and shortening the manual process while providing a greater output. Cloud-based, automated data processing technology now has the capability to ingest data from various sources and sort it into one spreadsheet making it easier for insurers to view and provide the best prices on the market. These advancements shorten the process that used to take weeks to just a few minutes with a greater output that offers more accuracy and detail.

Creating a better product and faster processing with machine learning and AI

The goal for any company is to achieve success across each branch of the business which is ultimately measured by growth and profitability. The key to maintaining success is adapting to change and utilizing the tools that are available. In the insurance industry, in order to reach the peak of success, we need to be open minded to technology and its capabilities as many are far beyond human reach.

By extending the reach of technology capabilities, insurers can now offer customers a more efficient product from start to finish. Not only can it be used as a tool to ingest data at a much higher rate but we’ve also seen insurers use technology in the form of drones to obtain high-definition images for remote and accurate property estimations and analysis, a technique that was used by a few leading U.S. auto insurers while  assessing damages caused by Hurricane Harvey.

Technology allows us broader access to more accurate data in real-time. Now we need to be able to process it in real-time. Machine learning (ML) and artificial intelligence (AI) can do that by streamlining operations which allows insurance companies to assess damages which can then be used to write better business that results in higher profits/less loss. This saves companies time, resources, and money that can be allocated to other functions of their business.

With the amount of data being compiled from IoT, the insurance sector has a tremendous opportunity to better serve customers, while expediting their own job by using underwriting, claims and reserving data to drive financial performance.

Preparing for future market outlooks

Analytics play a major role in how we can utilize technology. One example is predictive analytics which allow brokers and their clients to better model their own catastrophe risks, in turn, helping brokers essentially pre-underwrite the risk and in some cases, negotiate better rates for customers. Additionally, automated-suggested mappings can accelerate the process of bringing in new data sources, while providing new members with a strategic view of new opportunities. The preparation and analytics component can be vastly expedited and shared across the company within minutes, providing additional appeal to newer talent.

Using all the data collected, predictive analytics could show which quotes were selected within a specific subset of companies for a particular region allowing teams to configure their visualizations with drag and drop, efficiently displaying data from a library of graphs, tables and data-driven maps. This enables companies to scale and plan for the future by performing on-the-go calculations such as loss ratio or profitability with advanced Excel-style functions, underwriting to accurately determine risks and achieve higher profitability.
Whether it’s generating pricing, quantifying risk, quoting business, measuring or monitoring the performance of business, numerous operations demand complex data management from various sources across the organization to make decisions. Insurance companies need solutions that can compensate for the lack of time and resources available compared to the numerous submissions they receive. In the future, technology will be the driving force behind the insurance industry as companies realize the key to growth and sustainability is the ability to not only offer customers the first deal but the best deal.