Companies in the US homeowners market are increasingly relying on insurtech to boost efficiency and agility in the face of challenging market dynamics, according to analysts at AM Best.
Analysts observed that effective use of technology in this sector has helped to lower transaction costs and expand access to customers.
The cost and complexity of implementation remain a challenge for homeowners insurance, butinsurtech has helped to leverage the capabilities already deployed in the auto segment, including via sensors, analytics, and distribution options.
AM Best believes the use of artificial intelligence and advanced modelling techniques have assisted this segment in pricing, as well as retaining clients, raising conversion rates, and upselling.
Tech investments have also contributed to streamlining processes and enhancing efficiency in several areas, it noted, including finance, underwriting, and claims management.
Similarly, greater utilisation of mobile devices has strengthened insurers’ loss mitigation efforts, with pre- and post-event communications helping to guide policyholders through the claims process.
In addition, carriers have used risk-mapping software to incorporate per-risk reinsurance costs and other granular characteristics to estimate exposure and accumulations.
AM Best also pointed to the affect of machine learning on predictive modelling and pricing, which has improved granularity and loss cost assumptions, and facilitate more accurate underwriting.
In related developments, smart tech in homes has gained more popularity recently and is helping customers to run their homes more efficiently, through enhanced security systems, as well as water leak detectors, smoke and carbon monoxide detectors, and air purifiers.
AM Best does, however, foresee some potential disruption in the market due to interest from technology giants such as Google and Amazon, who have already begun making moves into the sector.
Google, for example, has purchased a minority stake in Applied Systems, a provider of insurtech and cloud-based software, while Amazon has partnered with Travelers to offer smart home kits, insurance quotes, and risk management information in some US states.