Insurance Industry Technology Trends: What Tech to Implement in 2021

As we enter the new decade, insurers are looking for a way to gain a strategic advantage in the industry. Implementing technology that relies on Big Data, IoT, and AI can have massive impacts on insurance companies, laying the foundation for revenue increases and future innovation. 

The insurance industry is evolving, and innovative opportunities to be a changemaker are waiting for you. The leaders of tomorrow are already implementing cutting-edge technologies that use big data, artificial intelligence (AI), and automation. While the industry spans a variety of sectors, every company, from health to automotive insurance, can benefit from these new trends. 

Trends in the Health and Life Insurance 

The Covid-19 pandemic has led to an onslaught of severe health challenges. Insurers have had to rapidly adapt in response. 

Healthy Habits Are Worthy of Rewards 

Customers are used to receiving personal ads on social media, or customized notifications from their banks. While the health and life insurance industries are definitely different from financial institutions, customers still expect that these companies will know them inside and out. As a result, insurers must re-evaluate their products to attract new customers and retain established ones. The acceleration toward innovation requires insurers to place the customer first. 

In the health and life insurance sector, wellness initiatives that reward healthy habits are growing in popularity. These initiatives also improve the relationship between insurers and policyholders because they must work together toward a common goal of better health. Insurers can use wearable devices, big data, and IoT (Internet of Things) to monitor, encourage, and support customer health. 

Real-World Examples 

Asking policyholders to share their data may sound invasive, but a blue paper by Morgan Stanley and BCG indicated that customers are prepared to share their data in exchange for incentives. 

The John Hancock Vitality Program gives its clients rewards for sticking to healthy lifestyles. The John Hancock Vitality Plus policy offers customers discounted wearable devices, then rewards them for healthy lifestyle choices, and even gives them the chance to save up to 15% on premiums for hitting activity targets. 

Big Data Simplifies Processes and Enhances Personalized Experiences 

An essential requirement for adopting personalization is having enough data on your customers—and the ability to decipher that information. Predictive data analysis, AI, and machine learning present exciting new opportunities for health and life insurance companies aimed at improving performance and forecasting customer behavior. 

Big data offers valuable information, allowing companies to be more aware of how to best serve their market. Life and health insurers must be willing to respond to this technological shift and appreciate that a one-size-fits-all policy is no longer adequate. Customers are searching for innovative solutions, and, as they adopt new digital technologies, their appetite for sharing personal data is also changing. 

Real-World Examples 

Blue Cross Blue Shield Axis (BCBS Axis) uses big data to empower patients, employers, and healthcare facilities to make better healthcare decisions. BCBS Axis lets people view and compare 90% of all doctors and hospitals in America. It also helps healthcare providers to improve and employers offer the best solutions to their employees. 

Ladder life insurance uses big data to simplify its application process. Using simple questions in an online form, Ladder combines AI and predictive data analysis to eliminate the need for time-consuming doctor visits. 

Haven Life uses big data to offer custom pricing based on a result from its MyLifeScore software. The score is determined by the answers to ten straightforward questions. By leveraging 48 variables, including age, family, and weight, Haven Life calculates risk based on the collective analysis and insights from nearly one million life insurance policies spanning 15 years. 

Telematics Contributes to Personalization 

Telematics combines devices that monitor different behaviors. This technology can do everything from counting steps to monitoring your sleep patterns and checking your activity levels. Integrating telematics into wearable technology provides health and life insurance companies with up-to-date statistics about the customers. 

The original purpose of telematics was to monitor drivers on the road. However, health and life insurers are expanding the application of telematics into other essential areas like healthcare. 

Real-World Examples 

John Hancock aims to offer interactive life insurance by using wearables like Fitbit, Apple Watch, and its app. The company collects fitness data and offers premium rewards, perks, and discounts for healthy habits. 

Trends in the Auto Insurance Industry 

Ridesharing, telematics, connected cars, and other technologies are leading to innovations in the auto insurance industry. This rise in digitization presents tremendous opportunities for auto insurers to lower claim pay-outs and serve the needs of emerging mobility services. 

Big data and AI Allows for Personalized Offers 

From electric and automated cars to shared mobility and integrated technologies like IoT, telematics, and AI, auto insurers are adapting to new insurance trends. Telematics, AI, and IoT help insurers work with policyholders to prevent automotive issues before they arise. These technologies offer benefits to the policyholder and the insurance company alike. Customers benefit by prolonging their vehicle’s health, which saves them money in the long run. At the same time, insurers lower the number of policy claims and enhance the customer experience. 

Real-World Examples 

Metromile uses telematics to offer insurance policies that are priced by how much a client drives their car. In order to offer pay-per-mile policies, Metromile requires policyholders to track their driving using a small telematics device that sits on the car’s dashboard. 

Discovery, an auto insurer in New Zealand, offers a vitality program that allocates driver rewards and benefits based on customer behavior. The company also uses tracking technology to sense when a driver has had an accident. 

Carrot uses a telematics black box or a mobile app to record driver journeys and track driver habits. Both devices track the driver and offer insights on mileage and driving style. In exchange for sharing data and getting a good driver score, drivers can earn points, which can be exchanged for gift cards. 

The Safeco Rewind program aims to help policyholders keep their premiums low by asking drivers who make minor driving mistakes to use a tracking device for four months to verify that they can drive safely. After the company gathers enough data to show that the driver is responsible, it can 'rewind' premiums to pre-accident levels. 

Progressive uses big data in its snapshot program to personalize premium rates based on how well and how much policyholders drive. It also integrates some monitoring into the app, which offers driving tips and lets you flag when you are a passenger in your vehicle. 

Trends in the Real Estate Insurance Industry 

Everything from how we interact with properties to smart home technologies to innovations in sales and rentals is evolving. However, the largest change in the real estate insurance industry is how insurers can integrate with smart home devices. This can give insurers access to new data, though it does come at an increased security risk. 

Smart Home Tech Comes at a Risk 

While smart homes are convenient and offer many benefits to policyholders, including the ability to manage lighting and security, they also offer insurers access to additional data. For example, if a customer claims to have a security system in place and receives a discount for it, smart home technology could verify that it is operational. 

While smart devices offer many benefits for property protection, convenience, and safety, they are still new technologies with questionable security, making them the least secure points on home networks. These weak points, which exist across the IoT, pose a risk to policyholders and insurance companies. 

Real-World Examples 

Liberty Mutual’s Dwellbeing monitors policyholders’ homes. It can monitor temperature, plumbing, and assess risks by sending notifications when maintenance is needed in the house. 

AI and ML Help with Predictions and Client Communications 

Insurers can leverage AI and machine learning to make accurate predictions about a property based on its history, location, state of repair, and desirability. Using AI and automation to assess data can transform a mass of data points into actionable insights. 

Real-World Examples 

Lemonade, a high-tech insurance company, uses their RPA (Robotic Process Automation) bot ‘MAYA’ to automate the intake, assessment, and claims from customers. 

Liberty Mutual uses big data to develop innovative tools for policyholders, including Total Home Score, which rates properties based on location, home values, neighborhood, traffic patterns, and noise. 

Drones Can Automate Damage Inspection 

Drones are increasingly used to produce virtual viewings, 3D walk-throughs, and aerial images. But drones also allow insurers to access previously isolated locations and hard-to-reach areas in order to assess and calculate risks. 

This data can be used to validate the price of policies, reduce inspection costs, assess real loss value in claims, and reduce fraud on claim pay-outs. For example, a drone can take pictures or videos of a property's roof, which lets insurers carefully inspect the damage before they make a claim payment. 

Real-World Examples 

Allstate insurance uses drones to inspect items that they cover, including homes, cars, and other insurable risks. 

GFA Generali Insurance used drones to inspect the damage on 300 buildings after Hurricane Irma hit the island of Puerto Rico. An inspection that would have taken a human team several months took the drones just ten days to complete. 

State Farm insurers have an in-house drone department, which they use for property assessments. 

Bottom Line 

In the health and life insurance sector, IoT, big data, and AI are growing forces. These new technologies offer insurers the opportunity to personalize their services and reach new markets by working alongside policyholders. 

In the auto insurance sector, telematics is increasingly popular because of its potential to lower premiums and reward safe driving. 

In the real estate industry, smart homes and drones are already popular, with over 90% of people in the United States owning a smart home device. The applications for the real estate industry are endless, but cybersecurity is a serious concern. Companies are innovating by implementing new technologies in exciting ways across sectors. 

DataArt experts can offer free expert advice on how insurance companies can set apart and dominate the market. Get in touch if you are ready to become a trendsetter in insurance innovation and want to future-proof your business.