Deciding where to target insurtech investment is a difficult task. Identity verification provider Trulioo suggests you start with the fundamentals
Insurance is a giant among industries; in the US alone, insurance premiums totalled $1.2trillion in 2017 and the industry had more than $5.7trillion in assets. The quest for technology to deliver up innovative solutions and lower costs is attracting new entrants and forcing incumbents to adapt.
As insurance is so reliant on data, technology can assist almost every aspect of the industry and, specifically, any that assists in risk-mitigation or risk-transfer can have a significant impact. Consider the internet of things (IoT), where sensors and connectivity are integrated in every imaginable object. Just as fire alarms reduce the damage from fires, embedded sensors in a bridge can warn of imminent failure, reducing the risk and the associated cost of payouts.
Car-tracking sensors can monitor use and adjust rates based on driving habits. Weather sensors can alert users of high-risk situations to avoid, thus minimising liability.
Data provides insight to improve risk mitigation strategies and when artificial intelligence (AI) systems are applied to better analyse it and advanced modelling techniques are employed to manipulate scenarios, it can help set more appropriate rates, spot fraudulent claims and point to new cross-selling or gap coverage opportunities. The rich information provides a path towards more customised insurance, where actuary data becomes ever-more refined and customers benefit from personalised packages. As a result, previously hard-to-insure markets, such as self-employed or marketplace workers, can now get appropriate coverage, tailored to their specific needs; insurance can be offered for a day or a week, and coverage can be extended to specific equipment or obscure situations.
Know your client
But, as insurance covers a gamut of sectors, it’s important to note that the impact of insurtech varies among market segments. The low-hanging fruit is areas that have direct touch with the consumer – improving onboarding, for example, is a quick win. Filling in mounds of paperwork has never been an enjoyable customer experience and, now that online and mobile alternatives are commonplace, it’s becoming increasingly important to offer those channels to maintain users.
Understanding who an insurance client is and what risk they may pose is fundamental to the nature of insurance. Therefore, proper identity verification measures during onboarding are necessary. With mobile and online channels becoming increasingly popular, electronic identity verification (eIDV) enables an applicant to quickly sign up online while still providing the necessary evidence to fulfil regulatory requirements, as well as assisting fraud prevention measures. Other identity techniques, such as document verification and biometrics, provide additional layers of verification, delivering more security and better
Identity verification can also assist in a payout scenario. After all, insurers should be extra diligent when paying out funds, so verifying a claimant’s identity can speed up the process as well as flagging potential fraudulent activities. Properly done, identity verification offers privacy protections to cover different markets’ regulatory requirements. Insurance documents contain an abundance of confidential information and processes should ensure that the information is protected and that sharing of the information is strictly limited.
The potential of insurtech to decrease risk, provide better coverage, save money, improve both back-end processes and the customer experience (CX) is significant.
Of course, with all the opportunities, it can be difficult to know where to begin. So why not at the beginning? Providing mobile and online channels to quickly onboard and renew customers is fairly straightforward and promises quick return on investment. With effective eIDV processes in place, risks are mitigated and the customer experience is positive from the start.
This article was published in The Insurtech Magazine: Issue #4, Page 17.