The insurance industry is changing. Insurtech, simply put, is the blending of insurance and technology, which fuses digital innovations to disrupt, transform, and modernize the slow-moving behemoth that is the insurance industry.
The advent of insurtech and the embrace of technological innovation brings many significant improvements to the underwriting, claims handling, and ultimately to the overall customer experience. By adopting new technologies, insurers and insurance adjusters are better equipped to service their client’s needs, reduce premiums, improve retention, and enhance the overall client experience.
Insurtech benefits more than just insurers and adjusters, too. Insurers and adjusters often deploy insurtech innovations to improve and streamline the customer experience. This empowers agents and adjusters with the tools needed to focus less on analytics and data and more on demonstrating their empathy and understanding at a time when customers need compassion and understanding.
First Off, What Is Insurtech?
Insurtech as a concept was introduced around 2010 as a reaction to the slow and arguably antiquated business model of traditional insurance. It’s embraced by those who aim to leverage technological innovations to disrupt and transform the insurance industry, similar to how fintech (or financial technology) changed the financial industry.
Insurtech is essentially fueled through:
- Data collected from the Internet of Things, social media, and GPS
- Artificial intelligence (AI)
- Blockchain technology
- Application programming interfaces (APIs)
Insurtech has become ubiquitous across the insurance landscape. As a result, insurance companies and adjusters may analyze the data collected via insurtech tools to improve the underwriting process, automate claims management, and reduce response times.
By partnering with insurtech firms or adopting insurtech approaches in-house, insurers and adjusters may mitigate many of the downsides so common within the traditional insurance business model.
The result is a wealth of benefits that impact both the company and its customers.
How FOCUS Adjusters Uses Insurtech
For many, filing an insurance claim is a frustrating experience. A customer may have just suffered a catastrophic loss of cherished property, a source of income, or taken a significant impact on their livelihood.
It’s why FOCUS Adjusters places such a heavy emphasis on empathizing with our customers. We treat each customer and approach each claim with compassion, courtesy, respect, and understanding. Our highly-trained adjusters prioritize treating our customers with dignity and guide them along through a difficult time in their lives, working hard to make things right.
Insurtech benefits our mission by giving our adjusters the tools to focus on what really matters: people. In addition, Insurtech handles the heavy and time-consuming analytical work to empower our team with humanizing the claims experience.
Much of a case’s background busywork (such as data analysis) is handled by insurtech, reducing cycle times and freeing up our agents to focus on swiftly getting our customers back to normal.
At the same time, the required information is quickly and easily accessible to support our adjusters in processing customers’ claims with accuracy, efficiency, and integrity.
Insurtech allows our agents to be better positioned to provide direct hands-on assistance and guidance throughout the process. By leveraging insurtech, FOCUS Adjusters can ensure our customers always have access to reliable, kind, and personable agents to help bounce back from whatever unfortunate events transpire.
1. Insurtech Modernizes the Value Chain
Insurtech may be leveraged to alter every stage of the insurance value chain. The vast amounts of data made available to companies that adopt insurtech solutions mean a better understanding of their customers’ needs and expectations, improved efficiency, more accurate risk assessments, and better performance.
Consider the types of data insurers usually collect. For example, when a business applies for commercial insurance, the insurance company conducts an underwriting process to consider the applicants’:
- Claims and coverage history
- Sales, revenue, and financial history
- Safety violations
- Business practices
This information is used to classify the customer and determine their policy premium. However, underwriting is both objective and subjective; an insurer may misclassify the applicant and assess too large or too small a premium relative to the risk the applicant presents.
Insurtech bridges that gap by employing new methods of acquiring data — and new sources of data. By coupling AI and machine learning to help efficiently parse data, underwriters are becoming more like data scientists. As a result, they are empowered to make more accurate decisions that are less risky to the insurer and more competitive (and fair) for the consumer.
At the same time, insurtech is disrupting other aspects of the value chain. For example, policies may be sold through various venues, including aggregators, partnerships with businesses in other industries, and apps, allowing customers to purchase insurance on their terms.
Even the types of insurance products being sold are morphing. For example, usage-based insurance is becoming increasingly popular, and products targeting businesses that were traditionally difficult to market to or insure.
By modernizing the value chain, insurtech allows insurers to assess and analyze risk more accurately and expand their market. At the same time, policyholders may enjoy fairer and more competitive rates and wider, more convenient insurance offerings.
2. Insurtech Makes It Easy for Insurers to Offer Custom-Tailored and Specialized Solutions
Where traditional insurance typically necessitated one-size-fits-all policies, insurtech has allowed insurance companies to offer personalized policies. Personalized policies respond directly to a policyholder’s needs, providing coverage for only what’s necessary at a price that matches.
For example, insurtechs like Buckle have sprung up to offer ridesharing insurance, filling the need for gig workers to be properly insured for personal and business use. Others provide insurance to low-income markets, micro-businesses, and businesses in non-traditional industries.
Insurers may also partner with insurtech firms to offer policyholders incentives for minimizing or mitigating risks.
For example, insureds with wearable fitness devices may receive discounted premiums for meeting certain fitness goals. Other insurtechs may measure the safety score of a business, providing incentives for higher scores (and better safety practices).
In other use cases, insurtechs may use technology to develop an app that provides injured workers with personalized care plans and policy information almost immediately after filing a Workers’ Compensation claim. Information is shared via text, download, or call and leverages AI to assign the right case manager for each claim without overburdening any one adjuster.
Such developments allow case managers and customer care agents to better assist and empathize with customers. By shifting away from the time-consuming data analysis task and introducing methods of staying in contact with customers through their preferred methods, agents may focus more on meeting a customer’s needs and guiding them through a frustrating and often complex situation.
For an industry that has been traditionally slow to react, insurtech helps insurers and adjusters quickly respond to the changing needs of an increasingly digital world. At the same time, customers may purchase the exact coverage they need when they need it, without any unwanted bells and whistles.
3. Insurtech Improves the Claims Management Process
A frustrating claims experience makes a customer eight times more likely to look for insurance from another carrier. Insurtech may reduce customer frustration by improving every step of the claims management process.
Claims management may use insurtech to deploy an automated claims concierge. Such a service may provide immediate answers to a policyholder’s questions or leverage AI to immediately settle a claim if it meets certain parameters. In either case, adjusters are freed up to devote their time to more complex cases.
The result is a satisfied customer after avoiding lengthy claims processing cycles and an insurer who has, ideally, both retained the customer and directed costly resources to other claims or assignments.
At the same time, adjusters and customer care representatives are still accessible to customers who require guidance or a helping hand. In addition, adjusters may use technology to track a customer’s case status and provide updated and actionable information as the case proceeds.
Insurtech may improve the claims management process even when it requires the skills of an adjuster. For example, insurance adjusters may use digital tools and technology to predict the likelihood a claim may lead to litigation and decide whether it’s more cost-effective to pay out the claim or go through a costly lawsuit.
In other situations, adjusters may take advantage of drone, satellite, or augmented reality technologies to assess a claim from afar without lengthy travel times or visiting a potentially dangerous location. As a result, the adjuster may process claims more efficiently while, at the same time, minimizing expenses and risk.
Benefits of claims management insurtech pass on to customers as well. For example, by using insurtech, adjusters are more likely to process a claim faster and return an impacted customer to their normal lifestyle as soon as possible.
4. Insurtech Helps Prevent Insurance Fraud
Non-medical insurance fraud costs more than $40 billion per year. Through necessity, insurers must pass on a portion of the cost to their policyholders, leading to premium increases.
It’s important, then, for insurers to seek out and actively prevent fraud cases, not only for their bottom line but also to be able to assess lower premiums from their customers.
Fortunately, insurtech helps insurers combat fraud. Since 2016, insurers have begun shifting away from traditional fraud detection methods, such as business rules and red flags, to technologies such as:
- Predictive modeling,
- Exception reporting,
- Data mapping, and
AI and analytics tools may be used to verify claim information, cross-check relevant details across various sources, pore through masses of data, and populate internal or third-party databases with their findings.
Fraud prevention tools may be used at every stage of the process, from initial underwriting to a claim. And because relevant insurtech tools use machine learning, they’re constantly adapting and evolving to detect and combat fraud better.
One obvious advantage of such technology means adjusters may more easily comb through a significant amount of claims in a short time to process verifiable claims quickly without overlooking fraudulent cases.
For example, when an adjuster is assigned a claim, they may run a tool to cross-check the claimant’s information against shared databases, news reports, and social media profiles. The tool may quickly detect past fraud cases through negative news reports or a social media post bragging about a past event, assisting in the adjuster’s decision-making process.
By using insurtech tools and processes, insurance companies and adjusters may better identify fraudulent claims, reducing the need to raise premiums for the sake of offsetting increased expenses.
5. Insurtech Encourages Innovation
For many consumers and businesses, the traditional insurance industry has remained seemingly stagnant. Until recently, buying or managing insurance could be perceived as an arduous or frustrating process involving time-consuming phone calls, in-person appointments, or documents sent back and forth via snail mail.
With the advent of insurtech, insurers and their partners are moving into the digital age. Policyholders may easily access policy documents via convenient online portals. Claims may be filed and handled through online chat tools or quickly handled and settled by adaptive AI.
Insurers don’t have to develop this technology on their own, either. Partnerships with insurtech firms allow insurers to deploy innovative tools without costly or lengthy development periods, improving the customer experience and bringing it into the modern era.
Insurtech also helps insurers and adjusters remain competitive. For example, insurtech may be used to provide an applicant with a quote for a custom-tailored policy at a competitive rate within a few minutes, providing same-day coverage and immediate access to policy documents and proof of insurance.
It also means insurers and their partners may form an ecosystem. For example, through partnerships, insurers may offer coverage via third-party platforms or apps. In turn, information may be shared through the ecosystem to expedite a customer’s sign-up, purchase, management, and support needs.
Sharing information through an insurance ecosystem may also benefit customer service. For example, if an adjuster can quickly access an insured’s information through an API, a claim may be processed more efficiently and with less back-and-forth, improving the insured’s experience and satisfaction.
Innovation achieved by using insurtech means insurance companies and adjusters may stay on the cutting edge of technology. It also means insurers and adjusters may focus their efforts and energy on customers and customers.
By using insurtech to perform much of the “heavy lifting” of data analysis and collation, more time can be spent on the human element: serving as compassionate advisors to guide insureds through complex and difficult situations.