Automating risk management, rating, quoting and renewals, integrating massive disparate legacy systems, and redefining age-old business models — essentially all at once — is no small task.
But they offer progressive insurers great opportunities to vault past the competition.
It seems as if emerging insurance technologies have flooded the market overnight. This shift, evolving over decades, has seen a rush due to agile disruptors recognizing the need for digitization and automation in a market previously slow to change.
Nevertheless, as disruptive forces increase, traditional insurers will have to respond.
This new model first appeared in 2010 when a German company, Friendsurance, offered products that promote transparency. Its pricing reflects the number of claims recently submitted.
Consider Lemonade — the insurance outfit, not the drink. It offers personal insurance to New Yorkers, boasting, “Maya, our charming artificial intelligence bot, will craft the perfect insurance for you. It couldn't be easier, or faster.” There's even a charitable angle: “We take a flat fee, pay claims super fast, and give back what's left to causes you care about.”
New approaches such as Friendsurance and Lemonade are creating customer-centric models that gain attention from consumers with the potential to change insurance dramatically.
Driverless cars, enabled by Internet-of-Things technology such as sensors, will affect the way cars are insured. Google and Uber are already investing in fleets of self-driving vehicles, but with few on the road so far, the extent to which safety has improved hasn't been determined.
Claims previously resulting from human error would likely no longer apply. The car manufacturer, not the driver, would be liable. If this happens, drivers can expect lower insurance premiums but may see higher prices or built-in fees to reflect the transfer of risk from driver to manufacturer.
Using electronic signatures
Electronic signature technology allows for the creation and transfer of secure signatures over networks via computers, tablets and smartphones. It can support completing an application or policy in one transaction.
E-signatures allow brokers and customers to finalize transactions from anywhere at their convenience and eliminate printing, scanning, faxing and e-mailing documents. Electronic signatures also help reduce risk by providing audit trails and ensuring that all documents are in order. Benefits include lower costs, fewer errors and more streamlined processes. These innovations are created entirely new ways for insurance providers to reach and retain customers, and it's only just beginning. Today, continuous innovation is just as important for insurers as underwriting, financial management, marketing and customer service.
Michael J. de Wall is president and founder of Ottawa, Canada-based Global IQX, a software provider of web-based sales and service solutions to employee benefits insurers. He can be reached at email@example.com.