Application of new technologies in the insurance industry

Application of new technologies in the insurance industry

The insurance industry is one of the oldest industries in the world, and according to the predictions of experts in this field, in 2030, the insurance industry will undergo extensive changes in the level of information technology and modern services. Insurance technology or insurtech is the little brother of fintech (innovative use of technology in providing financial services), but unlike fintechs, insurtech has received less attention. Although risk management is one of the main business components of the insurance industry, the decision-makers of the insurance industry have been cautious about the introduction of new technologies under the name of InsureTech. This has caused the services of innovative insurance technologies to not grow properly compared to other fintech areas. According to the report of the payment way news site, in 2016, investment in the banking industry was 4000 billion tomans and in the insurance industry was only 200 billion tomans. The situation is similar in the world and in 2017, more than 40 billion dollars were invested in fintech startups, while only 2 billion dollars were related to insurtech.

Insuretech is a technological ecosystem that, by establishing it, while maintaining information and with the possibility of monitoring surveillance devices, we can use new and future technologies to create new services and products and make smart decisions. The Insuretech ecosystem includes various components and is considered the main basis of its success.

With the emergence of insurtech concepts, we have to wait for completely new products and a completely different way of presenting them, which is out of the general mode and can be presented in a special purpose. For example, a person can insure her camera for a limited period of time, or for car insurance, based on the person’s records and car records, an insurance policy can be specifically defined for use within a certain time and distance range. Lemond Company, which is an insurtech company, is exclusively focused on the owner and tenant, and the user can set up and issue his insurance policy within 90 seconds, and in case of an accident, pay the damage automatically, analyze the information sent. and within seven seconds, the damage is done in the amount of the lost money.

The insurance industry is rapidly using smart solutions to improve claims efficiency, increase sales capacity, detect fraud and use robots. According to the research of the Jupiter Institute, the amount of insurance premiums sold by artificial intelligence is expected to increase from 1.3 billion dollars in 2019 to 20 billion dollars in 2024.

The integration of artificial intelligence into the insurance industry is increasing day by day, and if insurers want to remain competitive in the market, they must adapt to the changes. Managers of insurance companies are obliged to know the factors involved in these developments and to learn how artificial intelligence affects the way complaints are handled, distribution, policy issuance and pricing. Knowing about these issues is necessary for the success of insurance companies in the coming years and makes the field more favorable for training talents and skills, welcoming emerging technologies, creating a culture and drawing a vision for the future. Insurance companies and insurtechs have a common task, and that is to promote trust in new technologies. In fact, if we want to move the wings of the insurance industry and offer a digital experience to the customer, the first step is to carefully evaluate the impact of technologies and ensure that everything is transparent.

Internet of things, big data and machine learning are among the most important innovative topics of fintechs. In the future, insurance companies will need talents and people who have the skills and intellectual structure appropriate to these concepts. The next generation of successful and pioneering insurance workers must have a combination of skill, creativity, and passion for working in semi-automated and machine-based jobs. Generating value from the applications of new technologies in the future and providing a unique and comprehensive experience to the customer requires the use of skills, technology and having a general view of different parts of the organization. A smart culture change in insurance companies will help facilitate this process. Formulation and development of a solid and continuous policy to attract, cultivate and retain skilled and key employees is necessary to remain in the competitive field.

Many organizations, with the aim of acquiring necessary skills and capacities and maintaining knowledge, will start designing and implementing skills updating programs. The technology architecture of the future will also undergo general changes compared to today. Insurance companies should start making targeted investments and facilitate the process of migration to more advanced technologies. The rapid advancements that will occur in future technology will revolutionize the insurance industry. Those insurance companies that adopt new technologies to create new products, learn cognitively from new data sources, simplify processes and reduce costs will be the winners. Most importantly, it should be mentioned that focusing on the generation of opportunities from technology and not taking a stand against it will provide the opportunity to shine in the insurance industry in 2030.

Insurers are now starting to use new technologies in order to gain new insight from available big and raw data. Big data, machine learning and natural language processing technologies will help improve business operations and subsequently increase customer satisfaction. As mentioned, currently, insurance companies in the world have started using new technologies in some processes such as pricing products and paying damages. For example, currently, in a Japanese insurance company, the calculation of damage payments has replaced a team of 30 people in an intelligent way. Among the proposed technologies, machine learning technology has been more favored for use in the insurance industry.

Machine learning is a branch of artificial intelligence based on the idea that systems can learn from data, identify patterns, and ultimately make decisions with minimal human intervention. This learning is formed from pattern recognition and the theory was born that computers can learn and run by themselves without programming to perform specific tasks. Machine learning is a data analysis method that automates analytical modeling. In the past, insurance basically worked with the after-the-event model, and based on that, the insurers paid damages to the customers after the accident. Artificial intelligence changes this model and can inform customers about risks and even prevent accidents if possible. Also, using the Internet of Things and a large volume of data and their analysis will be used in the prevention of diseases, accidents and incidents. The use of artificial intelligence for analysis, evaluation and decision-making is known as predictive and prescriptive analysis. Insurance companies can use smart software to help make decisions in different areas.

Machine learning brings different challenges, for each of which a specific mechanism should be considered by insurance companies. The first point is that this machine learning requires learning and there must be an adequate amount of data and sales and damage transactions so that we can give the machine a variety of possible scenarios as learning input. Also, this method requires correct and reliable information sources, and the quality of the data used to achieve the appropriate accuracy of the outputs is very effective. On the other hand, it is difficult to justify the members of the board of directors of insurance companies to provide investment on these innovative issues because the prediction of success results is not accurate in the beginning of machine learning projects. Another important challenge is information security. Considering that machine learning and its data are usually used for sensitive and strategic sectors, it is very important to maintain this achievement.

The most important feature of the present age is change, and nothing is stable in today’s world. The increasing use of the virtual world in business processes, the use of artificial intelligence to simulate the future, the shortening of the product life cycle, the increase in customer awareness and the complexity of their needs are only part of these changes. These changes in the field of financial services, like other service sectors and industries, have left their effects, and sooner or later the insurance industry must accept these big changes and developments.

Final point

The era of transformation in the technologies of the insurance industry has arrived, and insurance companies and activists in this sector must maintain their customers by offering products, services and new process methods during the current decade. The insurance industry, by using new technologies such as artificial intelligence, machine learning, big data and Internet of Things, can take the right steps in providing more efficient services and products, more profitability and satisfaction of the beneficiaries, and naturally by improving the analytical, decision-making and service conditions and facilities, Process efficiency and customer satisfaction also increase.

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