Manulife (Singapore) | October 29th, 2017
InsurTech boosts the life insurance industry, according to numerous reports. For one, cutting-edge technology promises to make the system no slower than ten minutes. For second and more, insurance technology makes life insurance more consumer-centric, error-free, cheaper, and more accurate. It cuts out medical exams and medical questions and makes getting life or medical insurance almost like buying a Starbuck’s cup of coffee.
How InsurTech Improves Life Insurance
While Finance Technology breached the finance world, Insurance Technology spun life insurance in a new direction with five fantastic innovations: Artificial Intelligence, Machine Learning, IOT, Blockchain, Robo-advisory, Predictive Analytics.
Artificial Intelligence (AI) - Artificial Intelligence cuts out fraud, zones in on errors, analyzes medical data better than humans can, and makes life easier for you when you communicate, for example, via chatbots, instead of endlessly waiting for someone to take your call. A recent study conducted by Accenture’s Technology Vision for Insurance 2017 found that 75 percent of insurance executives believe that AI will significantly transform Life and Medical Insurance in the next three years with automated personalized services, faster claims handling and customized underwriting processes.
Machine Learning - Machine learning allows your insurance carrier to read thousands of medical certificates and to factor in your medical history, surgeries, and the length of your hospital stay, before calculating your payouts. According to a 2017 report produced by Japanese Fukoku Mutual Life Insurance, machine learning can increase the productivity of your insurance business by 30% a year, shaving dollars in the process. Health insurance companies use machine learning in claims processing, underwriting, fraud detection, and customer service, for starters.
Internet of Things (IoT) - The Internet of Things (IoT), a system of interrelated internet devices, helps life insurance carriers more accurately assess your health and price your premium. Carriers use IoT in numerous ways that include gathering data from wearable devices, such as FitBit and Nike+ FuelBand, both of which track your energy and fitness. Insurers factor this data into their underwriting process.
Blockchain - Deloitte’s Center for Health Solutions and Center for Financial Services found that the blockchain - an open, distributed and computerized ledger - improves life insurance in six ways. These include blockchain-run smart contracts that encode the information to make it more accessible and error-free. The blockchain, also, increases customer trust by making the data transparent. Third, the blockchain cuts costs by eliminating third parties, it reduces time to at most ten minutes instead of the current eight weeks and simplifies the entire process. While still early in the adoption curve, Deloitte reports that insurers who adopt blockchain technology predict revolutionary improvements in their businesses in the next five to ten years.
Robo-advisors - If there’s one thing that today’s super shoppers love - it’s connectivity. As insurance leaders like Majesco discovered, millennials prefer apps or websites to phone or agent when it comes to purchasing insurance. They want to research the information themselves and approach agencies rather than be approached. That’s where robo-advisors come in. Robo-advisors are automated services that use mathematical algorithms to answer customer queries and recommend suitable life insurance products or solutions. Some are run by minimal human intervention and are extremely sophisticated. The “Amelia” robo-advisor of American firm IPSoft, for example, speaks more than 20 languages and tells your state of mind by using sentiment analysis! Carriers say that robo-advisors make the selling experience more customer-centric, cheaper and transparent.
Predictive Analytics - Traditional life insurance runs on actuarial data, which makes a rough guess on how long the consumer is expected to live. The data is gained by the medical exam and a bevy of medical history questions and is needed to manage your risks. Enterprising carriers use predictive analytics, namely information from old-time models, to calculate your lifespan and risks. This process tends to shorten, if not eliminate, medical exams. Each of these InsurTech innovations makes life insurance faster, more efficient and customer-centric - perfect for our tech-savvy generation.
Key challenges that insurers who adopt InsurTech face include the expense of updating their technology, finding qualified workers to implement and revamp the system, and preparing their teams and clients for the changes. Risks, also, include firing unnecessary workers, having data hacked, and failing to follow changing government regulations.
Looming over all is the question whether the risks and expense are worthwhile.
Two years ago, a World Economic Forum research study entitled The Future of Financial Services concluded that while “the most imminent effects of disruption will be felt in the banking sector ... the greatest impact of disruption is likely to be felt in the insurance sector.”
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