Data and AI are fuelling the fire of unprecedented change across the insurance industry. Watch out for the breakout brands and new models set to transform the legacy technology and processes underpinning this sector.
Chatsworth understands the transformative role data and AI can bring to the insurance sector. This is a huge industry and it is ripe for intelligent change, driven by technology.
The prize is massive for the fintech firms which create a better, unified, and intelligent customer experience.
Insurance is built on risk and predicting how big a risk a person, company, or event is. The more information an insurer has, the more accurate the prediction.
But an industry that has traditionally priced risk has become a risk to itself with woeful data management and manual processes which are not fit for the modern world.
Just look at the state of the insurance industry today for a moment: Disparate sources of data, inefficient contract placement needing extensive manual intervention. All compounded by a complicated claims process and archaic billing systems.
Where does it leave us? With high reconciliation costs, ambiguity in loss conditions, and settlement delays creating high expense ratios for insurers. And a rubbish user experience.
This an industry ripe for disruption. A cabal of established firms has been in existence for hundreds of years, with little change to their products or how they take them to market.
Artificial Intelligence is capable of analysing data and situations faster, increasing accuracy, and enhancing customer customisation.
Insurtech is harnessing innovation and artificial intelligence (AI) to offer super-customised policies and real-time, dynamic price premiums.
Insurance works by applying actuarial tables to put policy seekers in a risk category. Stick enough of them together similar categories and policy becomes profitable.
These policies are signed up to on a long-term basis with minimal room for manoeuvre in the policy. An aggregated lock-in.
Insurtech will tackle this by applying big data AI to deliver and price products more competitively.
The traditional model where the company has to gather records from various sources will prove unnecessary. The data can move directly from one party to the other, further enhancing transparency and eliminating human error.
Insurtech will offer far more effective profiling. Policy construction and quoting capabilities with the capability to provide on-demand policies where customers can purchase insurance when they actually need it.
Millennials are simply not going to put up with phoning around for insurance quotes. That was the 90s.
And while the on-demand insurance offering is still in its relative infancy, customers are going to want it and the ability to access, update, expand and monitor their policies simply and effectively through their smartphones, at their convenience.
Chatsworth focuses on communicating how our clients are facilitating the digital transformation of legacy markets and sectors. Applying better technology to make processes, experiences, purchases and the flow of goods and money across borders quicker, cheaper, more secure.
We’ve been working with a number of clients who are pioneering change in the insurance space. R3 has been at the forefront of supporting the insurance industry as it moves through this change.
Distributed ledger and blockchain technology enables the entire insurance ecosystem to streamline operations and lower expense ratios from back-office operations.
R3’s Corda enables a network of insurers, brokers, cedants, and reinsurers to interact securely and near-instantaneously. Placed insurance contracts have legal validity and can be used for claims adjudication. Ultimately this frees up capital and resources spent on auditing and administrative costs
R3’s Corda Challenge: Insurtech proposed a new problem statement to challenge start-ups to build innovative insurance applications on Corda with entries working to address a host of legacy problems across the insurance industry.
Here’s just a few of them:
- ClaimShare is working to solve the problem of ‘double dipping’ in the insurance industry, where insurance fraud is committed when claims are registered with multiple insurers.
- Fardoe Software are building an intelligent data exchange platform to aid with fraud detection
- IntellectEU are reducing fraud in the insurance industry by using DLT to make sure claims are unique and verifiable.
- LISA Insurtech are using Corda to speed up the claim’s management and verification process
- Photocert are using DLT technology to help verify images that relate to the verification of insurance contracts
- io are building a claims data management tool for insurers, which should help reduce fraudulent claims.
For those about to shake up the insurance industry for good, we salute you.
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