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InsurTech: 5 benefits of technologies in Insurance Sector

insurancecopy-min

InsurTech is a buzzword nowadays where a variety of technologies are set to transform the traditional insurance industry. In the last two years, insurers have already transformed themselves digitally to offer convenience, security, choice, and a seamless experience to their customers.

Accenture estimates that insurance companies can increase their annual profitability by 20% with the right investment in the technology.

Internet of Things (IoT), telematics, drones, the blockchain, smart contracts, and artificial intelligence (AI) are providing new ways to measure, control, engage customers, reduce cost, improve efficiency and increase customer experience.

Here are five ways Insurers can stay ahead in the market and successfully fulfill high customer expectations. 

1. Lower Insurance rates:

 – Fitness apps or wearable devices:

Staying fit has many perks. Some of the fitness apps like Wysa and wearable devices help maintain weight, and food habits and boost energy and mood. And most importantly they can help save a huge amount of expenses related to health insurance costs. Numerous insurance providers have tapped into wearable devices to keep motivating their customers to stay fit and healthy and offer them discounts and benefits based on fitness levels.

– Self Driving car:

Self Driving cars can help in reducing the chances of accidents and lower life insurance rates. Since road deaths are a significant percentage of deaths in the entire world, any slight downward change will ultimately lead to lower deaths and hence life insurance claims.

2. Fraud Prevention:

Insurance fraud costs companies billions of dollars per year across the globe. Insurance companies should establish a technology framework, tap into advanced automation and analytics, and take steps to prevent it.

– Digital Signature:

Digital signature technology is without a doubt lowering fake insurance account activation and hence a fraud. For example, a digital signature can prevent fraud- insurance purchased after the accident can be brought down with digital signatures verifying the actual date.

– Data analytics:

The technology involves data mining tools and quantitive analysis. Data analytics can be applied to detect fraud. Predictive analytics is useful to improve the fraud detection process, helping prevent claims payouts. Analytics on claims and fraud transactions helps enhance risk management.

3. Lower underwriting cost:

–IoT

According to IoT Analytics, the global number of connected IoT devices is likely to grow at 9%, with 12.3 billion active endpoints. By 2025, there will likely be more than 27 billion IoT connections, which will have a significant impact on the availability of real-time information that insurers can use for better pricing/underwriting. Drones are satellites on steroids at least as far as underwriting is concerned. Satellites have dramatically changed how home insurance policies are written due to fire. Everything can be captured via drone footage even the houses that get covered behind the trees. Captured data can be used for underwriting purposes.

4. Billing efficiency:

Billing systems are not only integrated but now can accept varied forms of payments allowing ultimate flexibility to the customer and thereby making the billing systems efficient. The automated systems inform and remind customers of approaching due dates for premiums thereby lowering unintentional defaults.

Digital wallet has become one of the most widely used platforms for payment systems. Insurance companies are leveraging payment gateways like Google Play to sell insurance to users. Last year, SBI General Health Insurance launched Arogya Sanjeevani on Google Pay Spot to offer standard coverage at affordable premiums and improve the penetration of health insurance in the country.

5. Specialized insurance:

Each type of insurance is different from the other and the factors that are suited to one are not suited to the other. This requires the insurance agents to have specialized knowledge and the internet helps. however, Machine learning is vitally important here. It has the capability to learn and analyze billions of patterns and identify suitable underwriting clauses as well as identify specific customized plans for the customers based on the data provided. This can change the customer perception of the insurance company and provide an engaged customer who is likely to stay longer. 

Dinghy, is a pay-by-the-second insurance provider that customizes coverage for freelancers and businesses where customers may switch their policies on and off as needed without any upfront premiums, interest, credit checks, or fees. 

6.  Smart and Faster Claim Processing and Settlement: 

–AI-Powered Chatbots:

Claim settlement has been one of the pressing issues in insurance. With intense competition looming in the market, delay in the claim settlement gives a bad experience to the customer who prefers to switch to another brand. Insurance providers worldwide have been investing in AI-powered insurance chatbots to enhance customer experience. Metromile can validate 70% to 80% of claims instantly using AVA, an app based-claims assistant.

7. Data-driven pricing

–Telematics:

Innovation has become one of the top priorities for insurers today due to rapid change in customer demand. The usage-based insurance market is projected to hit over $190 billion by 2026, telematics is allowing carriers to capture user data and create personalized usage-based insurance products. 

For example, auto insurance was based on a pay-as-you-drive model where customers use to pay a premium based on the distance covered. But with technological innovation, insurers are working on a pay-how-you-drive model where customers can get discounts based on their driving skills. 

Rise in demand for innovative solutions, intelligent experiences, and speedier processes has led to technological disruption in the insurance industry. According to  IDC, IT spending in the insurance industry will increase globally at a CAGR of 6.0% by 2024, touching $135 billion. With continuous investment in technology, insurers are working on improving customer experience and operational efficiency to maximize profitability in the long run.

Thanks you Scott W Johnson, owner at WholeVsTermLifeInsurance.com for providing your valuable information on how technologies are helping Insurance industry.

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Open Finance: Reality or Hype?

3 minutes read

Open Banking has reshaped the fintech industry. Customers want a seamless experience with more convenient and flexible access to services. Technological innovation and digital transformation have led to the emergence of neobanks which offer a banking experience similar to delivery apps. Now the customers can avail of services like opening an account in minutes. In the last few years, another new concept- Open Finance has joined the queue. What exactly is open finance? Is it just hype or reality? And how open finance might improve customer experience (CX). These are some of the questions that we’re going to talk about in this blog. 

Open Banking

In open banking, banks and other financial institutions allow third-party financial service providers to access the bank’s customers’ data via APIs (application programming interfaces). This helps banks to create more personalized offerings and meet the changing needs of their customers.

What is Open Finance?

Open Banking and Open Finance are similar. However, Open Finance is slightly more advanced in the process. Simply put, it is the next step in open banking. 

Open Finance is a more customer-centric approach. It gives users a safe and dependable way to share their data with the financial tools and apps they prefer to use.

How is Open Finance different from Open Banking?

How is Open Finance different from Open Banking?

Source: Accenture

Open Banking has certain limitations when it comes to sharing of financial data. Here, only that data can be shared which is related to financial operations made within the bank’s app or in a branch office. Open finance goes beyond this limitation.

In Open Finance, non-banking financial data including mortgages, savings, pensions, insurance, and consumer credit – basically your entire financial footprint – could be opened up to trusted third-party APIs if you agree.

Open finance will help open new gateways for financial institutions to improve CX. Let’s dig deeper to understand how this concept will change CX in the Fintech world for the next-Gen customers. 

  1. 360-degree Customer Insights: Data acts as a tool to study deeply about your customers. Organizations can analyze the customer data and extract some valuable insights to design the complete customer journey. Open Finance opens a more secure pathway for financial institutions and gives a more complete picture of their customer’s finances. 
  2. Partnerships & Collaborations: With open finance, comes an opportunity for the financial institutions to network and collaborate with various providers. This means they could deliver a wider variety of services based on consumer data, uncovering new business models and innovations.
  3. Transparency for the Lenders: Lenders can evaluate and measure the creditworthiness of potential borrowers, audit documents, and offer customized solutions by securely collecting customer data. Machine learning algorithms may help to extract valuable insights from raw data.

Open Finance offers freedom and flexibility to consumers giving more options and control over the data they share and how they engage with their finances. With just 8 seconds of attention span, the new age consumers want better experiences to get hooked to one brand. Open finance creates unparalleled access to a broader range of products and services. With data sharing, banking organizations can keep track on the changing customer expectations who want frictionless interactions and hyper-personalized experiences across all touchpoints of the customer journey.

The Road Ahead

Statista predicts that there will be 63.8 million open banking users globally by 2024, increasing at an average annual rate of about 50% between 2020 and 2024. This means there will be more demand for innovative products and services in the industry. Banking organizations would need to analyze the rising customer expectations more closely than ever. And for this, data would act as a key to designing the experience of tomorrow. 

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