Insurance traditionally lags in terms of tech adoption
InsurTech complements the insurance industry using technology. It has been innovating at a faster pace compared to other tech spaces.
Technology as a disruptor in insurance has created new opportunities where digital transformations have taken place across the board, says Sumit Sood, senior vice-president & head of Apac, GlobalLogic, a San Jose, California-based digital product engineering services company. “Usage of various technology trends such as AI/ML, Augmented Reality, digital assistants, etc., have actually made insurers and the insured come close to each other,” he tells Sudhir Chowdhary in a recent interaction. Excerpts:
Can you tell us about the role of new technologies in the insurance industry?
Lemonade (an American property and casualty insurance company), a short time ago, settled a claim in just three seconds! The statement that “Insurance is not an obvious place to innovate as the industry has gone largely untouched by technology” does not hold anymore as recent InsurTechs (such as Lemonade, Hippo, Zhong An and Toffee, to name a few) have actually left no stone upturned. Zhong An is the only Chinese digital insurance company that sells Life and Annuties (L&A) policies online.
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InsurTech complements the insurance industry using technology. It has been innovating at a faster pace compared to other tech spaces. The disruption using technology in insurance has created new opportunities where digital transformations have taken place across the board. Usage of various technology trends such as AI/ML, Augmented Reality, Digital Assistants, etc., have actually made insurers and the insured come close to each other.
What are the existing challenges in the insurance industry? What kind of opportunities do you see for this sector that will impact the businesses post Covid-19?
Challenges for the insurance industry are multifold. For starters, due to Covid-19, pressure has increased multifold with claims increasing for health, business owner policy, etc. Auto LOB which is one of the biggest revenue generators may have a reduction of claims and fewer policies renewed. Also, the cost of Covid-19 testing and treatment is likely to squeeze US health insurers’ profits, which could lead to higher premiums in 2021.
On the other hand, Covid has created multiple opportunities for this industry in terms of building new product lines, better coverages to customers, unique product offerings, faster straight through processing for any policy or claims lifecycles. All these are customer focused. Some of them were already in the pipe but Covid pushed them to happen earlier than later!
Efficiency on policy issuance and faster claim process using technologies with combinations of bots and AI will be the new disrupters since the reach of the insurer physically is restricted to the customer.
How are AI and ML supporting in the development of insurance solutions?
AI and ML are both used by InsurTech and insurance companies to provide data insights to increase market value and decrease costs. For example, to improve customer experience, many insurers invest in virtual assistants like chatbots.
In addition to answering questions, chatbots are available 24/7 to give basic advice, check billing information, and address common inquiries and transactions.
Going further still, claims management can be augmented using ML techniques in different stages of the claim handling process. Machine learning models can help quickly assess the severity of damages and predict the repair costs from historical data, sensors and images. AI can be used for underwriting in predicting risks associated with property/commercial estate looking at geospatial data and location based exposure management.
Do you think insurance as a service industry is evolving in a digitally connected world?
Insurance traditionally lags in terms of technology adoption compared to other industries. Since the world is moving into a new lifestyle with focus on health, minimal expenses, and work from home culture, it has entered the fast lane of digital adoption. All insurance companies are moving to digitising their processes. Customer centricity is now a key focus with new ways of thinking by bringing unique product offerings.
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