We’ve had fintech, edtech, regtech and medtech. Now, it’s time for insurtech, according to Capgemini. The consulting firm’s report on how insurance firms will use technology paints a futuristic picture incorporating drones, artificial intelligence and big data analytics.
For its 2017 World Insurance Report, the company interviewed over 8,000 customers and 100 subject matter experts worldwide. It found that the insurance industry faces similar trends to the broader financial sector, with a less loyal, tech-savvy younger customer base looking for more digital interactions.
“Customers are seeking digital touchpoints. They are seeking three main things, which are convenience, agility, and personalization,” said Chirag Thakral, deputy head of the analysis group at CapGemini. “Younger customers are the most challenging in terms of their expectations and demands, and they are the most difficult to retain.”
Customers that Capgemini describes as “tech savvy” are looking for features such as online or via mobile devices according to the report, along with fast updates on claims status via similar channels. Digital policy renewal and cancellation, automatic connections with third parties to help with emergencies, and reward and incentive programs also top the list.
Incumbent vs incoming
This report – the company’s 10th on the topic – distinguishes incumbent insurance firms from insurance technology players that can bridge this gap by providing new customer experiences.
Each group has its advantages, the report said. Incumbent insurers offer brand identity and enjoy a higher level of trust among customers. Conversely, insurtech firms offer better value for money and efficient service. The two must work together, explains Thakral.
Capgemini’s research highlights several technologies that it said will change the game for insurance firms. Among them is blockchain-based computing, which it said will transform the exchange of information and improve fraud management. Artificial intelligence will also help to provide the personalized experience that customers crave, it said.
New technology will help insurance companies to streamline their back-end processes by reducing the human input necessary to process insurance contracts, Thakral suggested.
“Right now, for the simple cases it is easy to do that, and a lot of firms have already automated the process for making the underwriting decisions,” he said, adding that more complex use cases are emerging.
“Using artificial intelligence and machine learning, a lot of companies are still testing the proof of concepts,” he added. “For some of the more complex cases, they are using AI and robotic process automation to reduce the time for underwriting decisions.”
The report provides some examples of incumbent insurers that have been busy bolstering their technology story. Asian insurer AIA created an accelerator program to expose it to insurtech startups, in a similar move to others in the financial services sector such as CIBC and Scotiabank.
The report comes at a troubling time for the insurance market, with hurricanes Harvey and Irma having caused billions of dollars in damage in America’s southeastern states, and with forest fires ravaging Canada’s western provinces. How can insurance companies use technology to help cope with increasingly frequent and more violent natural disasters?
“Using predictive analytics, they are trying to make sure that the product availability and pricing is done in the right way,” he said.
He also sees technology making claims processing easier for insurance companies. “They don’t need to send somebody manually into these areas where it can be really dangerous with floods and fires,” he said. “They can send drones to survey the area, especially for these aggregated claims.”
The use of new technology such as IoT sensors will raise some interesting questions for the insurance sector in the future, though, he concludes. For example, he wonders who will be insured as driverless cars hit the roads.
“The whole point of insuring the driver goes away. I think it’s the car that gets insured, and do we need insurance for that if a large company like Google insures themselves?” Collaborations between insurance companies and the incoming insurtech firms will help to answer those questions, he predicts.