October, 2019

Connected Insurance - HYPE or REAL?

October 21st, 2019

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Hong Kong-based Digital Insurer Avocado (or ‘Avo’), is backed by Asia Insurance in order to encourage wider use of technology by Hong Kong’s young adults. Avo is a younger and more appealing brand to millennials and young professionals. Avo is mostly B2C-centric offering products related to lifestyle, financial and health-related protection plans.

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The California-based insurtech offers data solutions to insurance companies by leveraging social media, online content, and other forms of alternative data. By accessing data relayed as a stream, insurance carriers can evaluate risks continuously over time to capture a more detailed and comprehensive insight into that risk.

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There is a strong correlation between the internet of things or the volume of connected things and the future of insurance. It is estimated that the total number of connected devices will touch 30 billion by 2020 — creating an unprecedented level of data offering new monetisation opportunities.

Here are three core areas where the business impact of connected insurance is evading ‘hype’ — 

  1. Hyper-personalisation: If underwriters are allowed to price risk based on actual usage data, then both consumers and carriers can benefit from the data being exchanged. Usage based insurance garnered through technology effectively creates a unique price point that has been tailored specifically to that consumer. The end-user will be able to adjust the coverage needed based on the insights derived from actual usage versus hypothesised standard deviations derived from general population statistics.
  2. Real-Time Risk Tracking: By monitoring events in real-time, valuable insight into risk-causing behavior can reduce the likelihood of claims, fraud, price inflation. Using near real-time data can potentially improve claims evaluation and reduce claims settlement for carriers. To achieve this, insurers will need to adopt new real-time data streaming and analytics driven by artificial intelligence, which will operatively shift the dependance on historical data to price risk.
  3. Claims Prevention: The ability for insurers to continuously monitor the risks being covered in real-time can create the potential to reduce the likelihood of claims incurrence.
    To achieve this, carriers will need to enforce two approaches: intervene in real-time based on indicative IoT data that identifies the possibility of risk occurring; or take a more educative approach to change the consumer’s behavior and promote safer prevention.
  4. The promise of the ‘connected insurer’ future is an optimistic vision — one in which the rise of ecosystems will bring together networks of businesses from multiple industries offering services on a common platform.