Top insurance trends where InsurTech is expected to make its mark in the next three years were identified in an Infosys market survey as big data for customer insight and wallet share, cyber security for data protection and compliance, artificial intelligence (AI) for underwriting and automation, and technology for business rules extraction.
The financial services sector, including insurers and reinsurers, are among top investors in these technologies and cyber security, big data analytics, enterprise cloud and AI are the four digital technologies most in use by re/insurers today, according to the Infosys digital outlook report.
Insurers and reinsurers have been turning to the Internet of Things (IoT) to expand the horizons of actuarial science for measuring and mitigating risk with measures such as including data from automotive sensors, wearable fitness trackers and telematic devices to assess risk and reduce fraud.
The industry has become adept at applying new technologies to “both the pitfalls and the opportunities of digital technologies,” said Infosys.
AI is being used within the insurance industry for compliance risk management and predicting and preventing deviations. Machine learning systems are monitoring the activity of advisors and agents to pick out those likely to violate compliance norms.
AI and analytics can also prevent fraudulent claims, using algorithms that study data patterns in insurance claims to identify the wrong ones.
Blockchain technology is in use in smart contracts between re/insurers and the insured, and this has been heralded by some industry experts as potentially the most exciting blockchain application bringing the potential to move from simple binary triggers such as flight delay insurance to more complex IoT sensor triggered contracts.
Re/insurers continue to explore uses of blockchain, including claims processing, by joining consortiums doing research in this area; the Blockchain Insurance Industry Initiative (B3i) is one such project, currently in the market-beta testing phase of its reinsurance blockchain prototype and due to be deployed into production next year.
Enhanced use of big data is enabling insurers to broaden their customer profile and wallet share and cyber security solutions which protect customer data and improve compliance, were among the most important digital technology trends of the last three years, according to Infosys.
Using AI technologies for automating underwriting, and using new underwriting software, was the joint third most commonly reported trend.
Although the majority of survey respondents cited investing in cyber security and gamification, fewer than 20% of insurance industry Chief Executives believe they’re prepared for a cyber attack.
Infosys commented that “with the rapidly growing market for cyber insurance expected to reach 14 billion by 2022, insurers need to quickly perfect their risk assessment and pricing models in this new area to take advantage of the opportunity.”
A recent IBM study advised re/insurers to look for opportunities to harness new technologies that increase customer interaction value, improve agility and add flexibility in product development.
Therefore, as re/insurers invest in digital technology trends success for InsurTechs, IBM said, lies in the ability to identify scalable niches and look beyond insurance into new adjacent areas that can be integrated into the insurance value chain.