The rise of digital and information technology has transformed our world in dramatic and irrevocable ways. Almost every sector of business and industry has been changed, and the insurance field is no exception. InsurTech, a portmanteau of the words “insurance” and “technology,” has made a serious impact on the world of home insurance in recent years, and even more dramatic changes are poised to come. Here, we’ll take a look at some of the recent innovations that have changed the face of insurance and what’s coming down the road.
What Is InsurTech?
In the most basic sense, insurtech is the use of technological innovations to increase efficiency, ease of use, security, or other features of the current insurance model. These technologies might include artificial intelligence, IoT, data science, and more. The fundamental goal of insurtech is to reduce the possibility of errors, fraud, and delays in the insurance process. Although many sweeping changes have already taken place, there has been some reluctance on the part of established insurers to work with some types of insurtech.
How the Digital World Is Changing Home Insurance
Some of the more common ways insurtech is transforming the homeowners insurance landscape include:
Comparing Quotes Online
It used to be that comparing homeowners insurance quotes would involve calling or writing (maybe even paper letters!) to various insurance companies, asking for a quote. You might also have ended up visiting multiple insurance offers while searching for the best deal. Now, however, there are free online tools easily available, so you can compare quotes fast from the comfort of your couch or chair. The Zebra’s Kristine Lee has compiled a handy guide on what you need to know to make this process even faster and easier. Needless to say, the process is much simpler than it used to be.
The Internet of Things (IoT)
The Internet of Things (IoT) is a shorthand for an array of internet-capable devices that make use of technology to add new features and enhance performance — items like smartwatches, smart TVs, and smart home accessories being three major examples. IoT devices have made an impact on home insurance through devices such as security cameras, smart doorbells, sensors, and more. These devices can reduce the risk of burglary, provide early warning against things like carbon monoxide leaks, and otherwise make things less risky for both homeowners and underwriters.
Virtual Claim Processes
During the COVID-19 pandemic, the insurance industry was faced with a dilemma: with lockdowns and quarantines, infrastructure had to be put into place to deal with virtual claims processing — in other words, provide a way for customers to file claims, upload accident photos, and send and retrieve documents without the need for in-person interactions. Digital claims processing has since become a standard in the insurance world, which has led to quicker assessments, faster payouts, and generally more satisfied customers.
Client-side self-service portals have developed right alongside virtual claims processing. These web portals host knowledge bases, FAQs, document repositories, and other online information that allows policyholders to request quotes, update their personal details, and even manage their homeowners insurance policies without having to involve an agent or other human being. This not only leads to better-informed customers but frees up help desk agents and other employees to spend their time on other concerns.
Cybersecurity and Fraud Detection
Fraud, identity theft, and other online security threats have been on a steady rise for years. Advanced cybersecurity software has been invaluable in protecting businesses from malware, viruses, phishing scams, and other breaches of security. The insurance industry is taking advantage of this technological revolution, using AI and data analysis to identify irregularities or suspicious activity, making the detection and repair of security holes a much quicker and more efficient process.
In fact, the use of AI and big data analysis is both one of the most revolutionary and controversial developments in insurtech. AI is being used to streamline workflows, reduce or eliminate human error, and increase efficiency. Technologies such as natural language processing (NLP) let AI algorithms process massive amounts of data quickly — more quickly than a human could ever hope to. AI chatbots are also being used in customer service portals to allow for 24/7 support that doesn’t require a living agent.
Data science and analysis is another aspect of insurtech that is creating big changes. Big data drives the world in the 2020s, and being able to use data science to analyze and measure large amounts of data allows insurance companies to assess risk, provide for customer needs, and predict issues in a way that simply wasn’t possible a decade or two ago.