InsurTech is Changing the Customer Experience Game – And Here’s How You Get Ahead
Insurance can be a drag.
Nobody wants it, but it’s something that everybody needs. And now, more than ever, the gap between what insurance costs and how it actually benefits you is getting wider and wider.
This is a symptom of a much larger problem with the insurance industry’s balance of supply and demand. Fortunately, insurtechs are on the move and they’re mobilizing fast to close this multi-trillion dollar gap.
What is an insurtech?
A company that leverages technology to innovate and modernize the insurance space from the inside out. Think of them as the extended family of fintech, prepped and primed to disrupt incumbents, yet they’ve already proven their immense worth – a record-breaking $7.4 billion investment.
Like fintechs, insurtechs are all about breathing fresh air into an unchanged industry that’s severely fallen behind in the financial sector.
Their objectives? Putting people first. Squeezing out more savings and efficiency. Offering shinier, better, customized policies by using new data streams to price premiums. So in essence, their whole M.O. is to make insurance better in every sense.
But first, let’s explore why the insurance industry needs to change.
What’s wrong with today’s insurance industry?
Imagine you’re behind the wheel and you get into a fender bender. Regardless of whether it was your fault, you’re probably dragging your heels about a resolution, wondering if it’s worth going through the whole song and dance with your insurance company.
How much will it affect your premium? Do you have adequate coverage? How long will this process take? Is it worth filing a claim to restore your car to its former glory, or are you better off just accepting the damage?
You have so many questions, but most won’t be answered for at least a few more days if not weeks. Now, imagine if your immediate reaction to an accident wasn’t this internal debate of pros and cons, but instead a happy acceptance that things will take care of themselves accordingly with the least amount of negative impact on both drivers. Hold on to this wishful thinking, as it’s not as out of reach as you may believe.
However, usually, as a consumer, the insurance process can be incredibly frustrating. Products are complex and expensive to begin with, and they only get pricier with each incident that happens, whether it concerns the roof over your head, the pet you take care of, or the vehicle you drive.
Just applying for insurance is hard enough. You have to select from seemingly identical products, go through heaps of paperwork, pass a series of check stops to verify who you are, your health history, and income and assets. And by the end of it all, you still don’t really understand or trust what you’ve signed up for.
And that’s just on the demand side. On the supply side, insurers are restricted by crystallized laws and regulations that leave virtually no breathing room for either the insurer to negotiate a better deal or for the policyholder to have a say.
Believe it or not, insurance companies are more heavily regulated than banks because they fundamentally deal with risk management. One bad slip or wrong projection for a payout could have devastating impacts on customers and investors.
Although insurers may be experts at managing risk, the products on the market don’t reflect customers’ needs as closely because their underwriters simply do not have the real-time data that’s required to create affordable and personalized products.
Because the insurance industry primarily operates on legacy technology, impractical tools, and traditional sales channels, they can no longer keep up with today’s digital and modern standards.
Putting customer experience in the foreground
All signs point to insurtechs. They are poised for groundbreaking innovation and require much less overhead than existing institutions. Insurtechs don’t need to overcome the red tape and heavy burdens of decision-making in risk management.
With this freedom, insurtechs focus on delivering the things that matter most to consumers: a delightful user experience, transparency, and time-saving features.
By leveraging APIs, modular software, and AI to create simpler, more affordable solutions, consumers can experience seamless and relevant insurance with just the touch of a button.
But third parties aren’t left out of the equation either. With tech, insurance brokers, MGAs, and carriers can find easier ways to differentiate products, attract and retain customers, and generate new revenue streams.
Here’s what’s brewing at each stage of the new insurance process.
The big idea is to cut back time and human resources. With AI-powered solutions, selling insurance products to customers will become faster with the creation of risk profiles.
- Purchasing policies will be expedited within minutes or even seconds
- Instant quotes will continue to be refined by IoT (Internet of Things) devices
- Blockchain-enabled contracts will create instant authorized payments from a user’s financial account
- Payment verification and contract processing will be eliminated
- Interactions with insurance agents will be reduced and replaced with more meaningful conversations powered by AI bots to find tailored deals for customers
Underwriting and pricing
At the rate we’re innovating, machine and deep learning will overthrow the traditional underwriting process.
- Data streams will be aggregated for insurers to provide products tailored to the buyer’s risk profile and coverage needs
- Pricing will be based on real-time dynamic usage, added experiences, and value to introduce more personalized pricing and increasingly real-time service
- Data usage will be verified using test policies
Claims activities will be replaced by more automation and shift its focus on risk monitoring, prevention, and mitigation over the previous model to analyze and repair.
- More connected devices will be used to support the claims process, such as recording a video of the damage of a car accident to account for loss descriptions and recovery estimates
- Triage and repair services will become automatically triggered when policyholders suffer a loss to increase efficiency, time, and accuracy
- Turnaround time for claims resolution dwindles down to minutes over days or weeks
More AI trends to keep an eye on
An elevated customer experience picks up where the last innovation left off. So the smartphones and watches, fitness trackers, AI-cars, and home assistants that we know and love today will soon be joined by others.
New categories like medical devices, home appliances, and clothing will penetrate our markets. Before you know it, 2025 will be inundated with an estimated one trillion connected devices in our daily lives.
From surgical robots running operating rooms to standard vehicles becoming self-driving, the opportunities are as exciting as they are limitless. And these incredible lifestyle changes will require new risk assessments and insurance products that equally meet modern expectations.
An adaptable and deeply integrated society
Finally, new energy is taking hold to reinvent the future of insurance. Instead of lagging behind, carriers can join the innovation with insurtechs to elevate the customer experience and make meaningful strides to adopt modern technology.
Rethinking the entire value chain, insurtechs offer consumers more personalized solutions while saving them a pretty penny and increasing revenue all at once. While this industry may have long resisted change, now is the time to get in on the action.