The Property & Casualty insurance sector has seen a digital transformation, making processes from quotation to coverage management efficient. As we look towards 2023, this digital shift is accelerating with an omnichannel approach to customer service and more.
In fact, insurers of all sizes are adopting flexible, evergreen solutions to stay competitive. These 11 emerging tech trends we’re covering below have thus become a strategic must-have for insurers to gain the upper hand.
- Predictive Analytics
- Artificial Intelligence (AI)
- Machine Learning
- Internet of Things (IoT)
- Social Media Data
- Low Code
1. Predictive Analytics
Predictive analytics is used by many insurers to collect a variety of data to help them understand and predict customer behavior. However, there are new ways it can be utilized to improve accuracy of data.
In 2023, insurance companies can use predictive analytics for:
- Pricing and risk selection
- Identifying customers at risk of cancellation
- Identifying risk of fraud
- Triaging claims
- Identifying outlier claims
- Anticipating trends
The implementation of predictive modelling strategies has been demonstrated to enhance accuracy and boost revenue for numerous Property and Casualty insurance firms. A study conducted by McKinsey & Company in 2023 illustrated that the deployment of predictive analytics gave rise to a 10-25% increase in operating profits among the top four performers in EMEA during 2022. Furthermore, this impact is forecasted to expand across the subsequent two years. It’s noteworthy to mention that several firms anticipate realizing an uplift in their operating profits exceeding 25% as a result of predictive analytics.
2. Artificial Intelligence (AI)
The use of artificial intelligence (AI) has rapidly expanded, with AI-enabled devices becoming commonplace in homes around the world. According to a forecast published by Statista, the utilization of voice assistant technology in the United States is projected to exhibit a steady increase over the next few years. The 142 million users registered in 2022 are anticipated to expand to an excess of 157 million users by the year 2026. So how can this prevalent and accessible technology be leveraged by the insurance industry?
Consumers are always looking for personalized experiences, especially when purchasing something as important as P&C insurance. AI offers insurers the ability to create these unique experiences, meeting the high-speed demands of modern consumers. The key is to use AI’s capabilities to leverage the massive amounts of consumer data available to create personalized experiences based on an individual’s behavior and habits.
Additionally, with AI insurers can improve claims turnaround cycles and fundamentally change the underwriting process. AI also enables insurers to access data faster, and cutting out the human element can lead to more accurate reporting in shorter periods of time.
A report from McKinsey & Company revealed that AI could revolutionize the insurance industry by transitioning it from a “detect and repair” model to “predict and prevent,” which changes the operations for brokers, consumers, and other stakeholders. The result? Better decision-making, increased productivity, cost savings, and superior customer experience.
3. Machine Learning
In 2023, insurance technology trends will be defined by the integration of machine learning operations. This will necessitate multi-departmental collaboration to extract value from data-driven analytical strategies. According to Deloitte Insights, “MLOps encompasses a set of processes and practises essential to the deployment and management of machine learning (ML). Without sufficient MLOps capabilities, organisations can struggle to realise the potential of AI.”
Machine learning can not only improve claims processing – it can automate it. When files are digital and accessible via the cloud, they can be analyzed using pre-programmed algorithms, improving processing speed and accuracy. This automated review can impact more than just claims: it can also be used for policy administration and risk assessment.
When it comes to adopting machine learning capabilities, you don’t want to get left in the dust. All signs point to machine learning becoming a common tool in the insurance space. An SMA survey found that 66% of P&C insurance executives believe that machine learning has a high impact potential for commercial lines of business, while 53% of executives believe it has a high impact potential for personal lines.
4. Internet of Things (IoT)
Most consumers are willing to share extra personal information if it means saving money on their insurance policies – and the Internet of Things (IoT) can automate much of that data sharing. Insurers can use data from IoT devices such as the various components of smart homes, automobile sensors, and wearable technologies to better determine rates, mitigate risk, and even prevent losses in the first place.
P&C insurers can’t afford to delay in leveraging IoT capabilities, as forecasts project Iot insurance market size to reach multimillion USD by 2029. IoT will bolster other insurance technology with first-hand data, improving the accuracy of risk assessment, giving insureds more power to directly impact their policy pricing, and insurers the opportunity to improve accuracy and revenues.
Insurtech — or more specifically, insurtech companies — leverage the latest insurance technologies to reduce costs for both customers and insurers, improve operational efficiency, and improve the entire customer experience. While this may sound similar to digital insurance offerings that have been in use for years, insurtech takes those capabilities to the next level.
Gallagher Re’s report indicates a resurgence in Property and Casualty (P&C) insurtech funding in Q3 2022, marking the first increase since Q2 2021. A 20% quarter-on-quarter growth propelled the funding to $1.8 billion, contributing to over 75% of Q3 2022’s total insurtech investment.
The insurtech sector has attracted around $50 billion since 2012, hitting a zenith in 2021 before moderating in 2022. The funding distribution highlights a 60-40 split favoring P&C insurtechs over their life, accident, and health counterparts.
6. Social Media Data
Social media and its role in the insurance industry is evolving beyond marketing strategies and clever advertisements. Mining social media data is improving risk assessment for P&C insurers, bolstering fraud detection capabilities, and enabling entirely new customer experiences.
Take the Dutch insurance company Kroodle, for example. Their process of interacting with customers is entirely accomplished via social media. Customers log in using their Facebook credentials, and they file claims, get quotes, and request other services via a Facebook app.
Insurance technology can also leverage social media to investigate fraud. Insurers can look at the social activity of insureds and compare it to claims records, looking for any discrepancies. According to Insurtech Insights, the usage of social media data for fraud detection more than doubled from 2014 to 2021.
Auto policies will continue to be impacted by telematics capabilities. In insurance technology, think of telematics as wearable technology for your car. Cars can now be equipped with monitoring devices — think Progressive’s Snapshot — that measure various indicators such as data on speed, location, accidents, and more, which is all monitored and processed with analytics software to help determine your policy premium.
The benefits of telematics are numerous for both insurers and insureds. Telematics in P&C insurance will:
- Encourage better driving habits
- Lower claims costs for insurers
- Change carrier to customer relationships from reactive to proactive
According to some estimates, by 2025 95% of all customer interactions will be powered by chatbots.
Utilizing AI and machine learning, chatbots can interact with customers seamlessly, saving everyone within an organization time – and ultimately saving insurance companies money. A bot can walk a customer through a policy application or claims process, reserving human intervention for more complex cases.
Geico’s “Kate” is a virtual assistant that communicates with customers via text or voice, aiding in policy questions and coverage inquiries, available 24/7. More insurance companies are investing in technology like this, and chatbot capabilities are expected to increase in 2023.
9. Low Code
Insurers today need to be able to manage software platforms, deploy updates, and get to market with new products efficiently and accurately. While this process used to require a skilled developer or IT team, new advances in software-specific coding platforms have made this process easier than ever before.
Low-code configuration tools allow business stakeholders – not just IT professionals – to update and manage apps and software using an intuitive, user-friendly drag and drop functionality. With moderate or even elementary app and software experience, insurers will be able to quickly implement new and different user interface (UI) features that customers demand, in a fraction of the time usually required.
The biggest benefits of low-code development are:
- Drastically increased speed to market
- Widespread app development across organization
- The ability to build foundational features that can be expanded upon
- Empowering employees to take control of their work/offerings
Statista, it was revealed that nearly a third of participants (29%) found that low-code development operates at a speed 40-60% faster than its traditional counterpart. As such, it’s hardly a surprise that low-code solutions are rapidly becoming the go-to for application development. This shift is so pronounced that a Gartner report also predicted that low-code methodologies will be responsible for more than 65% of all app development efforts by 2024. Quite the leap, wouldn’t you say?
Insurers are taking to the sky, or at least their drones are. Unmanned drones are an insurance technology tool that will be utilized more by carriers in 2023. They can be used across many stages of the insurance lifecycle – collecting data to calculate risk before issuing a policy, aiding in preventative maintenance, and assessing damage following a loss.
Farmers Insurance is a great example, as they deploy Kespry drones to aid risk and damage assessment on homes. These drones perform roof inspections and other assessments, and the drones transmit their data to the cloud for analysis. This is yet another instance of IoT and other technologies working together in the insurance industry.
P&C carriers are always searching for the latest and greatest developments in insurance technology. It helps them not only stay ahead of their competitors, but also deliver the experiences customers expect in the modern market. With all of the innovation going to market in recent years, from smart home technology to insurtechs and microservices, 2023 will be a very interesting year to watch for insurance technology developments. Stay tuned…