Insurance Technology Brings New Opportunities to Market

Insurance Technology is changing at a rapid pace. Every day new advances are made that will enhance the quality of life for policyholders and make underwriting and collection much more effective and efficient. The development of new technologies provides insurers with new opportunities to leverage their experience and expertise in order to reduce claims that do not meet the criterion for payout, as well as increase the frequency of claims that are covered adequately. While these changes will certainly have an effect on the way most individual insurers operate their business, the overall picture for the industry as a whole is one of continued vitality and growth.

The trends that have defined this changing environment over the last half-decade or so include the adoption of data mining techniques and artificial intelligence to improve the accuracy and utility of underwriting. New advances in insurance technology can provide actuarial experts with a detailed picture of each risk profile, including the likelihood of making any claims that have not been previously covered. actuarial experts currently utilize a machine learning approach to generate and interpret the complex and often time-consuming underwriting process. Insurance companies may be able to take advantage of improvements in these processes that will lead to increased profitability, lower loss ratios, and less reliance upon outside underwriters.

Another emerging trend in the field of insurance technology involves the development of predictive analytics. This form of analytics has revolutionized how claims are processed by many underwriters and have resulted in fewer rejections for payout. Traditionally, actuaries and insurance managers have relied upon “bookness” methods of underwriting that involved taking an educated guess as to the probability that a claim would be legitimate. Bookness methods have led to many claims that have been paid because of obvious fraudulent claims. By relying on past behavior and the “normal” distribution of claims, underwriters have been unable to establish a constant and reliable baseline against which to evaluate future behavior. As a result, they have had to change the way they calculate premiums and underwrite policies.

Insurance companies that want to remain competitive in their market should take advantage of advances in insurance technology that allow them to use social media to identify risks associated with particular individuals or communities. Social media is currently the top outlet for individuals to post comments, links, and stories about a variety of topics. These posts often refer to a particular incident, such as a car accident, or viral campaigns, such as those related to the spread of the worldwide popular photo-sharing site, Facebook. Insurance companies can use these online communities to identify users who post inflammatory and highly public comments after a car accident, suggesting that they are at risk of being victimized by criminals. In addition to being able to monitor comments posted online, they also have access to a detailed log of user activity. Using this information, they can determine which of their customers are most prone to filing fraudulent claims.

Changes in laws and regulations involving insurance coverages have also created opportunities for innovative insurance technology and new business models. Some states have mandated that insurers provide consumer and driver information for purposes of driver safety. These regulations, which were implemented in several states over the past few years, have created a greater need for insurers to have up-to-date and accurate driver information in order to serve their communities effectively. New emerging insurance technologies enable insurers to manage these new types of data in a manner that would have previously been too expensive for carriers to implement. Some examples of emerging technologies that have been proven effective in delivering accurate data to insurers include predictive dialing systems, real-time GPS tracking, and automated exchange of medical records.

Advances in insurance technology enable insurers to save money and generate higher revenue. However, developing and maintaining these types of relationships requires a significant investment of time, money, and resources. The best way to ensure that these relationships are cultivated properly and remain profitable is to consult with an experienced consulting group that can help you develop and implement the best telematics system based on your current needs and business goals.