Evolution not revolution: How better customer data is at the heart of insurtech

It's often said we are on the brink of a technological revolution, where every aspect of our lives will be changed beyond recognition by AI and other high-tech developments. All this talk about the big tomorrow makes it seem that someone will throw a giant switch whereby technology is not relevant one day, and then …

by | November 14, 2017 | SSP Limited

It's often said we are on the brink of a technological revolution, where every aspect of our lives will be changed beyond recognition by AI and other high-tech developments. All this talk about the big tomorrow makes it seem that someone will throw a giant switch whereby technology is not relevant one day, and then is the next.

This is, of course, disconnected from the reality of what is happening right now. In truth, we are seeing evolution every day in the world of technology, rather than a revolution. For example, AI claims technology firm Tractable recently launched the next generation of its technology, which will provide a full estimate motor repair cost in minutes based on uploaded photos of the damage analysed by AI.

The progress that has already been made means each new development is another step forward instead of a giant leap into the unknown.

Evolution is everywhere

Let's consider for a moment the world of telecommunications. Prior to the introduction of the first iPhone in 2007, a mobile was just for making calls or sending texts to confirm arrangements. Now no one would consider buying a phone without other communication channels, such as Facebook, WhatsApp and emails, as well as always-on connectivity.

We are moving the same way in automotive technology. I remember back to my first car, a Triumph Spitfire. While they are rightly now considered classics, when the first one rolled off the assembly line, one of the latest features it included was wind-up windows.

Nowadays most cars have some level of automation, such as radar detection or cruise control. Indeed, if I drive less than 15 miles per hour through my local Cotswolds town, my current model starts searching for available parking spaces. When it finds one, it displays a blue P, and if I click okay, it parks itself in the space. All I have to do is control the pedals.

Such smart technology is also moving into our homes, with the ability to remotely control the lighting and heating, as well as devices that detect hidden water leaks before significant damage can occur. While the value for householders of coming back to a cosy home on a winter's night and avoiding the heartache of major flooding are clear, there are also benefits for the insurance industry.

Transforming insurance to risk prevention

The data generated by such smart technology provides insurers with a real-time view of the actual risks they are quoting for, which means they can price more accurately based on an individual and their specific behaviour. Additionally with alerts on emerging issues, whether that be hidden water leaks or windows left open when the householder leaves for work, providers can move away from paying claims to providing real-time / live risk management and prevention.

Given these positive results, what is stopping the insurance industry from making greater use of this technology? While providers are certainly constrained by legislation and insurance policies, another factor is hesitation amongst some consumers to adopt smart technology at this moment in time.

Separate research by LexisNexis Risk Solutions and Moneysupermarket showed that while only a quarter of homeowners currently use connected home technologies, 58% of Brits would buy a smart device in exchange for a reduction in their home insurance premium. So the opportunities are there for insurance providers.

Growing products and technology in harmony

With some customers still resisting change, what happens if the provider is rating based on a high degree of automation, but the policyholder never uses the smart technology? The answer simply depends on the policy wording that is in place.

When car theft was rife in the 90s, insurance companies mandated that certain cars needed a certain type of security device, and that the device be activated when the vehicle was unattended. If the device wasn’t activated and the vehicle was stolen, the insurers would be within their rights to not pay the claim.

Similarly what happens if today's customers choose a smart meter or smart insurance policy, and then don't take any action when they receive an alert about windows being left open? Would providers still be required to pay any resultant claim if they hadn't made such action mandatory in the policy?

Therefore it is important that insurance products for connected living keep up with the pace of technology and continue to adapt to meet changing consumer needs as the way we live our lives evolves. In addition to mandating that smart technology must have been used for a claim to be valid, insurers need to ensure their policies provide, for example, digital information cover. While home insurance may cover devices such as laptops, smartphones and e-readers, does this extend to the music, films and books that have been downloaded onto them?

Unless insurance products keep pace with technology, providers are creating a platform for disruption, where new entrants will be challenging for their share of the market.

Taking the next step

At the heart of this evolution is data. By combining all the information generated by smart technology with the data they already hold on customers and that from other external sources, insurers can understand more about the risk they are insuring.

With this insight into customer behaviour across all channels to market in place, insurers can not only provide the most accurate, tailored price for that individual, but also identify additional covers that they would find beneficial.

The best way for insurers to achieve a single view of any customer is by using a single solution, such as SSP Intelligent Quotes Hub – an automated whole of market product rating and quotation solution that brings risk selection, data enrichment and pricing together in a single place. This enables insurers to apply rates consistently and instantly across the market, based on actual real-time insight.

By choosing the correct technology partner, insurers can ensure their insurer-hosted pricing solution is backed by the trading experience required for a successful transition to digital pricing to maintain their market position.

As the steady evolution continues in the world of technology, the amount of data generated by smart devices will continue to soar, and data enrichment will become second nature in the insurance industry. Those insurers who don't have a single view of their customers built on the ever-growing number of data sources are set to be left behind.

I, for one, am excited by the road ahead as technology continues to evolve and we cross the boundaries that exist today. As I look back in 20 years' time on the technology of today and how far we have come, I am certain that every tomorrow will have been big and the revolution switch will remain unpressed.



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