According to Investopedia, insurance is a contract represented by a policy in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The insurance sector, over the years, has shown a gradual growth in the number of premiums purchased, meaning that people are becoming more aware about the concept of insurance and are noticing its importance. In the past years due to drastic changes in technology, the insurance sector has been disrupted. The traditional ways of insurance are now being tailored to the new and rapid modernising world.
The new fashion of smart homes, which are embedded with sensors, have helped insurers receive real-time data of the customers assets. For example, if there is a water leak due to one of the pipes being burst then an alert is sent to the insurer and the customer. So, in this case, before a major catastrophe occurs, the owner can be warned by the insurer to get it fixed. This reduces the number of claims. Also, with new technology, cars have sensors which can be used to judge how “good” the driver is, how much time of the day he/she spends driving, the distance, etc. This gives the insurer enough data to come up with a customised insurance plan best fitted for the client.
In the past years, the health sector has had dramatic changes with technology. This has not only helped the patient but also helped insurers. Digestible sensors have assisted insurers to customise the optimal pricing for the policyholder. With technologies like smart watches and smart wristbands, insurers can track health charts and therefore encourage their customers to be healthier by offering them discounts or gift vouchers. This reduces the number of claims and also improves the health of the policyholder, it’s a win-win.
In this day and age, people have high expectations for technology-based services like transparency, speed, regular engagement and a personalized experience. This has been a challenge for most insurance companies. However, recently an American company Trōv have an app where one can insure a small item for a limited amount of time by just posting a picture and adding a few details of the item on the app. This revolutionary insurtech enables coverage of items of a smaller scale. For example, one can insure their bicycle for their weekend trip to the mountains.
With modern technology it has become easier to catch insurance frauds. For example, you can track where a policyholder is using location/GPS on phones. Technology has also made it easier to contact the insurance companies to settle claims. Instead of a member of the insurance firm having to travel to review a claim, the policyholder can just send pictures and settle the claim over text messages. Digital technology has significantly shortened the time between reporting and settling the claims as all the data can be collected in minutes.
It is predicted that changes in technology will increase revenues and reduce claims and administration costs in the insurance industry. As seen above, technology has revolutionised the way insurance policies are made, reported and claimed, and helps insurers adapt to a fast-growing world.