Top technology trends in 2018 for the insurance industry

Yogita Khaitan

“Insurtech”, similar to fintech, has become a buzzword, owing to the digital innovations and transformation disrupting the insurance industry. Rapidly changing customer behaviour due to the adoption of technology has led to an increasing need for insurers to rethink their strategies and business models.

Burdened by traditional processes, outdated systems and paper-based operations, insurtech has started making inroads more silently into the insurance sector. While the progress is slow, banks and insurance companies continue to embrace fintech innovation.

2017 saw many insurtech startups being launched, with investments from traditional banks and insurance firms, leveraging a combination of new technologies like IOT, Blockchain, Cognitive, Gamification, Chatbot, Augmented and Virtual Reality to reduce operational cost and ensure enhanced customer satisfaction.

Here are some technology trends that will make waves in the coming year:

Robotic Process Automation and Cognitive/Artificial Intelligence

Insurers deal with large amounts of repetitive and rule-based tasks with structured/unstructured data. Robotics Process Automation (RPA) can help reduce manual operations costs while improving service and compliance.  As RPA replicates human activity, it can be thought of as a set of software “robots”, forming a virtual workforce available 24 hours per day, with full audit and 100% accuracy. It can be implemented as:-

• Standard Robotics which perform the functions that a claim executive does. That is: - expedite claims processing, reducing operational cost and improving accuracy and compliance
• Intelligent Robotics that leverage machine learning and AI to allow processes to adjust and optimise for subjective decision making. For instance, deploying speech-recognition systems at call centres, using advanced analytics platforms
• Cognitive RPA can help transform insurance business functions like Customer Engagement, Insurance Sales and Customer Service, Underwriting and Risk Management, Claims Management, Fraud Handling, Marketing and Proposition (Product) Management, Regulatory Reporting.

Chatbots, robo-advisors and virtual insurance agents leveraging cognitive RPA have proven to enhance customer engagement significantly. For instance, US Insurer Allstate has employed a chatbot called the Allstate Business Insurance Expert (Abie) to help insurance agents in the quotation process for complex insurance products. Chinese search engine Baidu also uses Artificial Intelligence systems to discover patterns that can be used in insurance underwriting. AIG has invested in a startup company called Human Condition Safety to offer a solution that combines wearable technology with AI to track workers’ safety in factories 

Gamification, Virtual Reality

Businesses in many industries are adopting gamification and virtual reality technologies to engage customers and differentiate through experiences. The insurance industry hasn't been left behind.  Insurtech companies use AR/VR technologies to create innovative solutions that would help them project real-life situations, identify damages and potential risks, train agents and even more. For instance, BioBall created by Cigna takes snapshots of the patients while playing ball to capture BP, Pulse rate and cholesterol readings. This data can be used by health insurance companies for preventive health care to detect claim risk.

Digital devices such as wearables enhance the gamification experience. For example, health insurers can invite customers to use their digital fitness wristbands to participate in real-time challenges with their peer groups. This can improve customer engagement, encourage competition, and promote physical activity within a specific time frame.

Blockchain, IOT

Blockchain as a distributed ledger offers use case opportunities to insurers across the value chain from verified digital customers to automated underwriting, claim management and fraud prevention. It can be used as follows: -

• Enhancing consumer experience by leveraging customer identity data which is verified and available in the distributed ledger shared between a consortium of insurers, KYC databases and notary networks. This will reduce the burden on the customer to submit KYC documents multiple times
• Efficiently and speedily process claims - Startup companies like InsurETH built a flight insurance product using smart contract where the policy conditions were held on Ethereum blockchain. In the event of a delayed/cancelled flight, the smart contract would automatically initiate payouts increasing trust, transparency and customer experience
• Bitcoins can be leveraged as rewards and loyalty programs by insurance companies
• In emerging markets, P2P blockchains with smart contracts are applied to micro-insurances to automatically underwrite and handle claims to payout to insured farmers. For example, this might be triggered when drought conditions are reported by verified climate/weather databases.
• Internet of Things (IoT)- Cars, home appliances can have their own insurance policies registered and administered by smart contracts in a blockchain network, automatically detecting damage first and then triggering the repair process, as well as claims and payments.

(The author is the Director of Program Management at SapientRazorfish. The views expressed in this article are author’s own and do not reflect the view of the organisation)