InsurTech has revolutionized the way insurance companies operate. Gone are the days of sifting through tons of paperwork trying to verify consumer information for policy underwriting purposes and loss prevention. Now, insurance firms can simply turn to technology companies for a code, algorithm, or data transfer that takes care of that and so much more.
But while InsurTech is not a novel concept, many are still not exactly sure how it works nor what kind of long-lasting benefits this technology can offer those in the insurance business as well as consumers. We’re here to change that. In this post, we’ll explain what InsurTech is, how it is shaping the future of insurance for providers and policyholders alike, and why insurance professionals should consider building an InsurTech app.
What Is InsurTech?
InsurTech, which is short for insurance technology, refers to technology that is specifically designed to improve or facilitate the way in which insurance firms operate. InsurTech is transforming the way insurance companies obtain, share, and process data by digitizing many of their products and services.
Instead of accessing customer information the old fashioned way (by contacting consumer reporting companies, healthcare providers, and other relevant agencies), insurance firms can leverage the latest technologies at their disposal, including Blockchain, Machine Learning, and IoT to not only acquire the data they need at a much faster rate but actually obtain in-depth information about would-be or current policyholders and current consumer trends. This invaluable data ultimately reduces internal operational expenses for insurance companies, allows insurance professionals to work more efficiently, and even enables insurance providers to offer customers more personalized services.
InsurTech and Insurance Company Partnerships
InsurTech providers often partner with incumbent insurance companies to create better and more well-rounded solutions for customers that can be accessed via web and smartphone apps. Both incumbent insurance firms and InsurTech companies stand to benefit by working together. Insurance companies can gain customers via referrals from InsurTech companies that offer quote comparisons. In return for promoting their policies, insurance companies can offer reduced rates for consumers applying for policies directly through the InsurTech app. At the end of the day, InsurTech companies, insurance firms, and consumers end up benefiting from the partnership.
InsurTech offers numerous benefits for both providers and consumers, regardless of the type of insurance policy being offered. Through the use of Blockchain technology, an open-source comprehensive record of previous digital transactions that can be shared among multiple parties, insurance companies can obtain all the information they need about an applicant or current policyholder. This information can then be used to improve loss prevention tactics, safety protocols for the storage and transfer of personal policyholder data, and provide a better User Experience (UX) for consumers through their web and mobile applications.
Below are some of the many ways in which insurance technology is reshaping the insurance industry:
Faster Underwriting Process
Blockchain technology can pull up a policy applicant’s information with respect to their previous insurance policies, claims, payments, and other relevant data. Insurance companies can essentially obtain a quick snapshot of the applicant’s entire history to speed up the underwriting process as far as determining their rates or denying them coverage.
Facilitated Claims Management
Most insurance claims tend to involve multiple parties. For example, a health insurance claim will involve the health insurance provider, the patient, and the doctor or facility that provided the services. When a claim is filed, all these parties must communicate and exchange information regarding the incident. The Blockchain technology behind InsurTech streamlines the claims process by generating universal claims documents that all parties involved can review and manage in real-time, instead of having to deal with multiple forms and document formats.
Improvements in Risk Assessment and Loss Prevention
Insurance companies often suffer losses due to insufficient information regarding their applicants or even human error during the underwriting or claim filing process. Blockchain technology can help reduce these incidents by vetting applicants at a much faster pace and much more accurately than through manual verification or risk assessment. The technology also provides insurance firms with the consumer’s previous insurance history and other data that can affect the type of insurance they are applying for.
For example, if a consumer is applying for car insurance, insurance companies can quickly use Blockchain reports to obtain the applicant’s accident history, previous claims, traffic citations, and other relevant information that will help the insurance company determine an appropriate policy quote or deny a policy if the applicant is deemed to be too much of a liability.
Blockchain uses extensive cybersecurity protocols to exchange digital information between trusted third parties about a consumer’s activities, transactions, and general behaviors. Insurance companies can leverage this technology to detect and prevent fraud incidents and ensure current policyholder data is accurate. Policyholders also gain assurance that any and all insurance transactions are fully documented in the event they need to contest a specific charge or pull information on a prior claim for legal purposes.
Consumer Trend Analysis and Product Personalization
Machine Learning algorithms can be incorporated into InsurTech solutions like smartphone apps to help insurance companies offer more personalized products to their policyholders. The technology evaluates the policyholder’s behaviors and trends, then anticipates potential services the policyholder might benefit from or suggests alterations to their current coverage. Insurance companies can improve their customer service while policyholders enjoy coverage that is more accurately tailored to their budget and needs.
As InsurTech continues to evolve, insurance companies are faced with a choice to either evolve alongside this growing trend or remain stagnant in their old business models. However, building a comprehensive InsurTech solution that both improves internal processes for insurance providers and consumer experiences is not easy. For the best results and to reduce potential setbacks regarding security protocols and consumer data exchange, it is highly recommended that insurance companies work with an experienced app development company.