By Sam Griffith
If you’re in the insurance industry, you’ve heard the term InsurTech become increasingly popular over recent years.
Short for ‘insurance technology’, big insurance corporations jumped on board early with InsurTech to transform dated systems and drive digitalization, propelling their businesses forward.
More and more small insurance providers are implementing these technologies to improve efficiencies of operations and enhance their accessibility to their customers.
So, what is Insurtech exactly? And what benefits can it bring to your small insurance business in 2023 and beyond?
How InsurTech can benefit your small insurance business
Improve customer experience
As policy holders’ expectations evolve, they increasingly look for companies that offer modern, digital experiences. A PWC survey found that 41% of consumers were willing to switch insurance providers due to a lack of digital capabilities.
By utilizing the latest Insurance technology, there are many ways your customers can be more engaged, allowing you to create a more personalized service. This enhances the customer experience, leading to higher customer satisfaction and loyalty.
Current and potential customers can use websites and mobile apps to research, compare coverages and explore options without little or no demand for your representatives’ time.
Through mobile apps and social network integration, insurance technology strengthens your company’s self-service abilities. From purchasing a policy to getting coverage information or filing a claim, your customers can now take care of whatever they need 24/7.
Insurance technology puts everything at their fingertips, empowering them to access information and make decisions when it’s convenient for them.
Gain a competitive edge
While other small and moderate-size insurance carriers continue to function with outdated legacy systems, InsurTech gives you a competitive advantage by simplifying the customer experience. Amongst its benefits, it helps insurance carriers reach a wider range of potential customers, increase their security and customization, and promote innovative new products and coverages.
Reduce operating costs, increase profit margin
Reducing operating costs is crucial to keeping healthy profit margins — just look at Amazon, and you will see how the behemoth e-commerce marketplace has enjoyed prodigious success. They quickly adopt emerging technologies and practices that help reduce operating costs. With a small physical footprint that cuts down on overhead and makes for healthy profit margins, Amazon was able to generate $469.8 billion in 2021, alone.
Implementing InsurTech in your business enables you to do the same — accomplish more with less by maximizing profits with less overhead.
Promote efficacy with automation
Automation allows your company to reduce the cost associated with routine work, like data entry and follow-ups, increasing the pace of operations throughout your business and promoting more efficient workflows while giving your employees the time to focus on more creative work.
According to a report published by McKinsey & Company, one million insurance jobs could be automated in the United States. Other statistics suggest that by 2030, 46% of insurance claims and policy jobs will be displaced by automation.
In addition, automation can lead the way to creating helpful solutions, such as automatic billing, policy renewal, underwriting, and communication.
Improve accuracy when predicting risk
Insurance technology provides more accurate risk assessments by enabling you to process big data from numerous data points, such as;
- Artificial intelligence (AI) and machine learning (ML) algorithms- analyzes extensive data to identify patterns and trends to predict risk.
- Natural language processing (NLP)- extracts relevant information from unstructured data sources, such as text-based documents or social media posts, to help underwriters assess risk.
- Robotic process automation (RPA)- automates routine tasks in the underwriting process, freeing up underwriters to focus on more complex tasks.
- Predictive modeling- uses statistical techniques to help underwriters assess risk and make informed decisions by analyzing data to predict future events.
- Telematics- uses sensors and GPS to collect data on an individual’s driving habits to assess risk for auto insurance underwriting.
It’s no secret — insurance is a data-driven business that relies on analyzing statistics and numerous factors about customers. However, the industry still largely leverages historical rather than real-time data. InsurTech provides agile, real-time risk insights and analysis to support your risk-informed decision-making.
It’s no secret that insurance fraud is a significant concern in the industry. In 2022, 20% of insurance claims were presumed to involve some measure of fraud.
Insurance technology can significantly reduce, if not eliminate, fraud within your organization in several ways, including:
- Data analytics: Insurance companies can use data analytics to identify patterns and trends that may indicate fraud. For example, if a large number of claims are being filed from a particular geographic area or policyholder, it may raise red flags.
- Predictive modeling: Predictive modeling involves using machine learning algorithms to identify potential fraud before it occurs. By analyzing historical data, these algorithms can learn to recognize patterns that are indicative of fraudulent behavior and alert insurers to potential risks.
- Electronic documentation: Using electronic documentation, such as electronic claims forms and digital signatures, can help reduce the risk of fraudulent claims by making it more difficult for individuals to alter or forge documents.
- Identity verification: Insurers can use identity verification technologies, such as biometric authentication, to verify the identity of policyholders and prevent fraudulent claims from being filed under false identities.
Dealing with fraud once it occurs is expensive, time-consuming, and negatively affects everyone, down to your policyholders. Implementing InsurTech is a proactive approach that will save time and money while maintaining a positive customer experience.
InsurTech has made buying all types of insurance more accessible and convenient for customers while reducing costs, improving accuracy, and promoting efficiency for small insurance organizations.
As insurance technology evolves, the benefits for all stakeholders, down to the policyholders, will only continue to grow.
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