Is the Boom of Insurtech Reforming the Insurance Industry?

The insurance technology is an increasing phenomenon that has revamped the insurance industry to connect with a wider customer base. Insurance firms have started using advanced technologies like big data analytics and social media platform to store large volumes of data. These technologies allow companies to analyze information and take critical decisions in the business processes. Insurtech platforms has improved the underwriting accuracy and loss prediction. This helps the insurance companies to generate greater operational efficiency, thereby lowering the costs of the insurance products through the Insurtech platforms. The adoption of advanced technologies in the insurance processes aids to enrich the customer experience, regain more direct control of the customer relationship, and attract prospective customers.

The insurance industry is facing daunting technology challenges that include aggressive time frames, limited resources, and often-unrealistic demands from business stakeholders. Many insurance firms are trying to reduce the cost, enhance the service quality for their customers, and position themselves for the growth in rapidly changing markets. In addition, many insurance firms are under pressure to digitalize their business processes and equally importantly, their business models. The unwieldy legacy applications and changing regulatory environments make these efforts even more difficult for the insurance providers in different markets. However, the highly competitive market environment, which changes the customer expectations and the adoption of third platform technologies like big data analytics and social media will drive the Insurtech market. Insurance industry is facing the challenge of transforming consumer behavior and business models through digital technology. This requires insurance industry to be well equipped to capitalize on this potential. The purpose of this report is to understand the importance of the need to invest in digital technology to meet the demands of the customers.

Risks & Challenges

• Major internal challenges apply continual pressure to manage expenses and adoption of sophisticated analytics. Implementation of data capture, metrics and analytics and inadequate access to external data is considered as a major challenge
• The rise in fraud cases is becoming more complex and due to increased regulatory compliance and has a direct impact on the customers' claim experience.
• There are also issues with data protection and privacy. The data privacy rules and regulations, customer unwillingness to share information, changeable lifespans of social media platforms, negative feedback and reputation damage are the social media challenges. organizations are finding tough to define and measure the real value that social media can bring to the business.
• Controlling claims payout and operational costs.

Benefits

• Data analytics and predictive modeling will help in authenticating, optimizing claims processing and identifying suspected frauds thereby reducing the incidence of fraud claims, optimizing claims outcomes and mitigating bottom line risks.
• Fraud analytics can pull data into one central platform, help in building enterprise-wide data excellence infrastructure.
• The social media channels has helped Insurtech providers to reach customers through digital and omnidirectional channels.

Analytics Enabled Underwriting, Claim & Fraud Management

Insurance operators should improve the underwriting, claim and fraud handling processes by using analytics. Reporting & descriptive analytics and predictive & prescriptive analytics minimizes the threats posed by fraud. This will enhance consumer protection with comprehensive channels of complaint resolution mechanism. So the adoption of analytics will help the insurance players to deal with marketplace volatility and organizational complexity in these regions.

Insurtech platforms ensures proper management of data and risk thereby bringing underwriting accuracy and loss prediction. They are providing underwriting automation that is available for life and commercial lines. This is helping them to leverage the external data sources and the new underwriting process, thereby optimizing the process via improved collaboration and artificial intelligence. Insurtech companies provide artificial intelligence underwriting and claims solutions that uses big data to address complex risk-based problems. This automates the claims processes, thereby improving the efficiency in the process. Insurtech has a huge potential for transforming the back office through data and analytics thereby bringing new approaches to underwriting risks and predicting loss.

The drivers connect with their family and friends through the platform that are provided by the Insurtech companies. The premiums are pooled together online. The members trusts each other and put the claim when necessary and not to blowup claims. Many Insurtech companies also provide efficient tools for claim validity estimations, claim adjustor and surveyor details, reduction of claim TAT.

First Best Systems, Inc. provides software solutions for property and casualty insurers. It offers solutions that include underwriting workstations, agent portals, agency connectivity, and new business systems.

Praedicat is dedicated to improving the underwriting and management of liability catastrophe risk. The company’s patent-pending technology delivers information extracted from scientific literature on emerging risk.

Tapping Potential of Social Media Channels for Better Market Penetration & Collaboration Medium

Insurtech companies need to focus on broadening Internet-based strategies, some of which hinge on social media platforms. This will broaden the communication and marketing channels that are required for launching new products and services. 

Insurtech companies make use of social media platforms to collect customer feedback, resolve queries in real-time, provide product updates, and as a means to drive insight generation and fraud investigation. Internet-based strategies help to overcome geographical limitations that agents often face while providing services to the clients. For instance, the focus groups or discussion forums can be created to help customers interact with each other and with industry experts on issues arising out on miscommunication or industry regulations. The Insurtech providers are conducting various media campaigns where they are launching new insurance products. This will boost the transparency and will offer customers a platform to scrutinize different vendor offerings. If used correctly, social media has the potential to help insurance companies generate maximum profit value and avoid business risks. It is important that vendors formulate strategies to attract different customer segments. This could be possible only through multiple distribution and communication channels. To that end, insurance vendors are making use of cost-effective solutions in infrastructure, communications, and analytics.

Insurtech companies should formulate corporate level policies that define the usage and management of social media platforms. Such policies could also outline the degree of disclosure to be made available on the platforms. Such developments lead us to infer that Internet-based strategies will have a long-term influence on the insurance market. 

Due to the number of social media users increasing rapidly, the insurance companies are preferring social media as a marketing tool. Social media helped customers to share their view points on different insurance products and services. The social media platform also helps in recording complaints and also provide feeback on different insurance products and services. The integration of social media as a marketing strategy since acts as an effective tool for lead generation, retention of customers, and remediation. In order to remain competitive and to influence the vast potential of the social platform in the different market, insurance firms are required to invest a significant amount in the data capturing tools required to capture the vast number of social media data and consider implementing social media data analytics tools.

The insurance companies are working to transform insurance buying into a retail shopping experience. This may help customers earn loyalty points and undertake (unrelated) purchases. The said insurance companies are making use of 3PD as an early warning system. The 3PD helps insurance companies spot potential customer defections and non-renewal of policies. Such visibility may help insurance companies to formulate and execute customer-specific retention treatments.

Insurtech companies are trying to link internal information such as claims, billing, policy, and customer relationship management systems with external insights such as web navigation and social media channels. This will boost customer loyalty levels. This is how top Insurtech companies are tapping into personal networks to create new business models. The generation and assessment of such data is helping lower operating costs for insurers. Such information may also help them to create more effective acquisition strategies by lowering risk profiles and altering the focus of traditional distribution channels.

In addition, the social media not only limited as a marketing tool, but it is also increasingly gaining popularity as a collaboration tool for many insurance firms worldwide. In recent days, many insurance companies are using social media like social networks, blogs, and photo sharing platform to engage with customers, brokerage firms and employees. It also helps firms to share updates on policy changes externally or internally via social media platforms such as Twitter, Facebook, Pinterest, YouTube, LinkedIn, Google+ and etc. To ensure privacy, insurance firms can deploy their own social media platform to collaborate with their employees and insurance broking agents. Moreover, the use of social media aids insurance firms to drive down costs and improve communication efficiency.

Many leading multi-line insurer and social business platform provider have collaborated to empower the insurance agents and share content with clients through social media. Such online peer-to-peer insurance models allow customers to connect and form individual insurance networks. Such strategies result in significant mutual value exchanges. For instance, such models enable certain insurance companies to offer customers up to 50% lower premiums. Such strategies have also improved carrier profitability and efficiency.

Insurance provider also encourages customers to review its products and services, and the feedback is shared with product managers. This rating is key to the company’s social strategy.

Many insurance companies are exploiting social media platforms because such strategies help save money, expand market share, and enhance brand awareness. Social data also helps carriers understand customers better and lower risk profiles. Leading insurance carriers deploy data-driven strategies (such as text mining and natural language processing) in their risk management efforts. The use of such technologies helps the industry detect fraudulent claims and prioritize resources on cases that need detailed attention. As part of such efforts, some companies are using social network analysis to analyze communication texts or transcripts in an attempt to identify keywords and phrases that are commonly associated with fraud.

Social media has helped the insurance industry through building and maintaining long-term business relationships. There are social media benchmarking companies that examines on various activities of insurance companies and also assigns a score based on a blend of quantitative and qualitative metrics. The scores are based on quantitative and qualitative metrics (such as content strategy, engagement, growth, timing, and frequency of posts, tweets, and videos) on Facebook, Twitter, and YouTube.