The insurance industry has an opportunity to use technology to improve efficiency and realize new strategic opportunities. Digitization and Internet of Things (IoT) open doors for insurance carriers to improve their customer experience. Those opportunities could create new services or business models (e.g. on-demand insurance) and improved efficiency (e.g. automated processes).
Mobile apps transform customer expectations
Mobile technology is emerging and is changing customer interaction, service and sales. Mobile apps for insurance are rapidly replacing traditional ways of communication between insurance companies and their customers. The technology behind mobile apps for insurance is improving rapidly and worldwide adoption seems just a matter of time. Insurers should be aware that such apps are also transforming customer expectations. Nowadays, customers are demanding instant response when they reach out to an organization.
Mobile apps are used to support several insurance processes and are multifunctional in some occasions. The apps mostly support the submitting of claims and contact customer service. Requesting a new policy or receiving a quotation are less common, but are undoubtedly upcoming use cases for mobile apps. All the information that is filed within a mobile app helps the insurer to quickly assess involved persons, objects and damages. This makes it possible to identify suspicious cases in an early stage.
Gain insights with visual screening
Looking at fraud fighting, one of the use cases of mobile technology can be found in visual screening. For instance, both online portals and mobile apps for insurance often have the possibility to submit photos or videos. This provides an insurer with more tools to assess the involved object or the damage claimed (e.g. driving direction, point of damage and environment).
Moreover, instant insight into the complexity of a claim gives an insurer the opportunity to efficiently determine the need of an expert. Visual screening technologies could decrease the initial processing time of claims and applications, since a list of standardized questions will become superfluous when images and videos are submitted.
“Pay-how-you-drive” insurance
Telematics in insurance uses real-time data to monitor the behavior of policyholders and calculate the premium accordingly. ‘Pay-how-you-drive’ insurance is by far the most common and practical example of telematics technology. Telematics comprises a ‘black’ box with software and sensors that needs to be installed in a vehicle. Special software is used to process the data. The technology registers location, speed, acceleration, braking and the G-forces that impact the car when swerving or turning corners.
Some insurers provide mobile apps with the telematics box. This enables easy access to the data and makes drivers more aware of their driving behavior. It is a win-win situation: making telematics more than a tool for the insurer, and becoming a very interesting application for the insured. The reward system makes it feel like a game. Points are deducted for speeding, braking or fast acceleration. As people enjoy getting a high score, they try to speed less. Positive scoring may result into a lower premium, making the use of telematics very relevant for the insured.
Telematics also enables reconstruction of vehicle positions and trajectories in accidents, making it a lot easier to verify claims. Based on the data provided by telematics-equipped vehicles, insurers are in a better position to assess risks. However, as most insurers indicate, those are not the main objectives of telematics usage.
62% of insurance companies aims to stimulate safe driving behavior with telematics insurance.
Benefits outweigh risks
The insurance industry is transforming digitally and most insurance companies have set their first steps. Downside could be that there are clear risks involved; the technology is still relatively new and improving on a day-by-day basis. Challenges concerning privacy need to be tackled ways to manipulate data should be eliminated. However, the benefits strongly outweigh the risks.
