Three main trends into digitization of the insurance market
How is artificial intelligence (AI) applied in the insurance business? What new opportunities does the use of digital insurance services provide for customers?
Instant payments, no bureaucracy and an insurer in your pocket - this is the near future of insurance, the outlines of which are already visible today. And in this there is no "science fiction" and futuristic forecasts: only the analysis of technologies that are already actively used by insurance companies and are changing the very philosophy of insurance products before our very eyes. These are artificial intelligence and big data analysis, the use of new channels of communication with customers, online identification and paperless workflow, as well as remote monitoring and telematics.
I'll start with the use of artificial intelligence technologies, which include two overlapping tasks: internal underwriting and communication with the client. The power of AI is used by insurers to calculate rates, analyze risks, the impact of non-standard factors and their non-obvious relationship. This non-linear relationship cannot be seen with the “naked eye,” but it has a lot to say about the potential risks.
"Machines" communicate with customers, generate offers, analyze and cut out fraudsters, help make different communication formats (voice assistants, chat bots, etc.) truly omnichannel. It is even more important for the client that AI helps to calculate the entire algorithm of insurance payments in order to speed up this process, avoid mistakes and delay in deadlines.
Currently, insurers use only a fraction of a percent of AI capabilities. This is a fairly capital-intensive tool, moreover, built on the use of big data, access to which is still difficult. Even so, this technology is fundamentally changing the landscape of the market. In the future, not just standard algorithmic bots, but full-fledged self-learning neural networks will conduct a dialogue with the client, and the calculation of tariffs and the calculation of losses will be fully automated.
The next major trend towards digital is remote identification of customers and the transition to a completely paperless workflow. This will allow clients to get an "insurer in their pocket": to use a mobile application without having to visit the office, which greatly simplifies the client's path.
In the meantime, the insurance market lags behind other financial markets in terms of penetration of online sales. So, according to the Bank of Russia, last year the share of premiums received by insurers through the online channel amounted to 5%, practically unchanged compared to 2019. In absolute terms, online premiums reached 75 billion Russian rubles, the overwhelming share of them - about 67.5 billion rubles - fell on OSAGO.
The development of remote sales channels and the non-documentary registration of losses significantly saves both time and money for both the insurer and the client. After all, in the end, the main thing in insurance for a person is the simplicity and efficiency of receiving payments. Already today, a number of insurance products have implemented the possibility of automatically receiving payments (for this, it is not even always necessary to independently declare an insured event) or referrals to a car service. In turn, companies can reduce operating costs and commissions to intermediaries, thereby lowering the cost of insurance products.
Finally, the third in turn, but not least, the trend is the use of telematics or, more broadly, the use of remote monitoring of all insured objects. Today, these technologies are already widely represented in agricultural insurance, auto insurance, real estate and property insurance and personal types (smart homes, the Internet of things, wearable gadgets, etc.), but over time they will become an integral part of almost all insurance products.
The use of these technologies leads to a real individualization of tariffs, a different view of risk management, and prudent behavior of the insured themselves. After all, the introduction of new technologies in insurance means greater transparency, including in personal life. But it should be borne in mind that regular monitoring affects not so much the cost of the policy, but the real protection, including the life and health of the insured. Understanding this will simplify the massive challenge facing the insurance industry.