Technology is advancing rapidly, changing the way insurance companies do business and having a big impact on how insurance companies operate. Those insurance firms that adapt in a timely way will reap the benefits, while those lagging behind may put their company’s survival at risk.
Here are a few of the trends in technology that will have a big effect on the insurance industry.
1) Mobile Devices
It is estimated that more than 70% of insurance companies now offer services through mobile applications. Not only can mobile devices offer applications that customers can download, they can be used by agents to get the information they need when working with customers.
2) Big Data and Analytics
The insurance industry depends on data, so this technology may be a real game changer, enabling companies to collect and analyze huge amounts of information that had been unavailable up to this point.
Companies will be able to use a variety of different data sources to get instant access to accurate, all-encompassing information. This will help companies improve their underwriting and offer more efficient service to customers and agents.
When the companies have aggregated all the data, they will then be able to use it to do predictive modeling, incorporating analytics right into their operation. Predictive modeling can be used for underwriting, marketing and claims.
For example, in the underwriting process, Big Data can be used to improve the accuracy of risk assessment and pricing precision. Companies can use Big Data analytics to see which customers are more open to cross-selling, and which are dissatisfied and likely to leave.
With the capacity to collect and analyze vast quantities of data, companies also will be able to cut down on the amount of insurance fraud by detecting patterns of deception that otherwise would remain hidden. Moreover, Big Data allow companies to look at risk characteristics and claims statistics to determine which accounts would need more loss control efforts.
Another thing companies can do with Big Data is monitor whatever is being said about the company on social media, enabling the company to better control its reputation.
Of all the emerging technology, Big Data may be the most potent in terms of its potential to change the industry.
Telematics has been getting a lot of attention from the auto insurance industry due to its potential to increase the efficiency of handling auto insurance. Instead of using large rate categories determined by reviewing the performance of the book of business, telematics will enable companies to refine their rates individually by using customers’ actual driving behavior as a basis for rate levels. Moreover, telematics will enable the companies to give feedback to drivers about their driving behavior, which may lead to safer driving habits.
4) Regulatory Compliance
The insurance industry is highly regulated, and so agencies that are able to use technology to make their compliance with the regulations more efficient will better be able to handle new regulations (such as the Affordable Care Act) as they come out.
5) Social Media
Social media will have a big effect on the insurance industry because of the way it allows for collaboration.
It provides an electronic platform where people can access documents and share information and ideas. More than 70% of companies that use agents have a social media platform, but only about 30% have a social media policy in place to help them maximize the benefits from the technology.