Imagine a driver coming back from work deciding to turn the Uber app on to conduct the Uber business.
This seems like a routine and established business practice today. However, dealing with the dynamic nature of insurance risk profile has made the entire insurance servicing industry rethink their product and tech strategy. The moment the driver turns on the Uber app, the driver needs to be covered under commercial auto insurance, rather than personal auto insurance. This changes the driver risk profile instantly, as well as the need to cover the driver under the new risk profile with an appropriate insurance product while keeping the same person and vehicle profiles. Another similar example is a homeowner renting out a room to an Airbnb customer. These new business models, and the need to provide an appropriate insurance product to cover the risk in real time, are creating this revolution in the insurance product and tech industries.
There are the four basic underlying technology components required to create an infrastructure to support these new insurance products - calculating accurate risk profiles, delivering real-time quotes, handling data, and assessing claims.
Real time data acquisition and streaming
The insurance industry runs on both historical and transactional data. The more the data, the more accurate the assessment and risk calculations. Advances in sensor technology have created ways to acquire data which were not possible earlier. Any device today can be turned into a smart device. Smart shoes can collect data about an athlete’s footwork. Smart trackers can track delivery driving patterns. Drones can collect accurate data in remote areas. Coupled with advances in data streaming technology, collection and storage of large amounts of data is now possible and is a key factor in predicting accurate risk and thus reducing the premiums.
AI-based risk algorithms
The evolution of AI, big data processing and computing power has made data processing very useful in looking for desired insights and deriving accurate metrics. Image processing has improved the accuracy of damage assessment. Complex events processing has improved the prediction accuracy of risk. Advances in healthcare technology have made it possible to reduce accidents and related injuries. The potential is exponential and has yet to be fully explored or commercialized.
API-based infrastructure delivering information
An API infrastrucuture helps expose data and logic securely to a wide variety of consumers, including other business entities. Sharing more data and logic with customers increases business value and helps create new business models . Coupled with cloud technology, API’s have made real-time decisions possible across geographically diverse data stores and logic.
Rich, configurable/responsive data presentation
The advances in UI and front-end technologies have enabled highly interactive and dynamic data presentation across multiple channels and devices. It’s also now possible to white-label the UI in the form of widgets to speed up the UI development process. Frameworks like React, Angular, Vue have reduced the dependence on server-side logic and have improved the performance of data presentation.
Insurance tech is getting more exciting day-by-day, enabling businesses to be agile, customer friendly and secure. We are witnessing a revolution in the insurance industry, bringing insurance closer to the customer by making it available on demand or by leveraging an ‘Insurance As a Service’ model. Innovecture is helping large insurance and risk brokers to launch new products by transforming its core business and tech.