By the year 2030, get used to a world where you would be wearing sensors as you step out of the house to detect your behaviour. Yes, we are talking about how AI would have changed the way insurance works. The premium that you pay on a policy would be constantly adjusted depending on the risks you take. It would no longer be a fixed amount that is decided at the start of the policy based on the paperwork. It would be dynamic depending on your changing lifestyle and the decisions that you make daily. It would be the same in case of claim processing in case of an unforeseen event happening. The data to assess the damage would be generated immediately on-site and shared with the insurer for the claim to be processed. It sounds futuristic and unbelievable right now but that is exactly where insurance is heading in the future. Artificial intelligence is going to redesign the customer experience and redefine the insurance business model as well.
Data Explosion from connected devices
With the passage of time, we will find several wearable devices being used by consumers that collect data just like sensors of today. These may be fitted to clothes, shoes, cars, watches, phones etc. These devices would collect real-time information about their owners. Some studies estimate that the number of wearable devices could exceed 1 trillion by 2025. Mind-boggling, isn’t it? The information relayed by these devices will help insurers understand more about the customers, their lifestyles, tastes and preferences that would help them to customize insurance policies for them. New categories, tailored pricing and real-time delivery would be the order of the day.
Increased use of Robotics/ Wearable Technology
Increased use of robotics and wearable technology may soon become the trend. Robotics will transform the way humans interact with the world. Additive Manufacturing, better known as 3D printing can bring digital flexibility and efficiency to manufacturing processes. Commercial insurance products will also undergo a change. 3D printing, which is already in vogue, will become commonplace in the next 5 years. All these developments are bound to change the way risk is perceived. AI is already being used in farming. We are already seeing the use of autonomous drones and farming equipment in agriculture and surgical robots in the field of medicine. These would be common in the next decade. Self-driving cars would be commercially viable by 2030.
All these changes would shift the way risk is perceived. Customer expectations will change and new products and channels will be developed.
Open Source Data Sharing
When data becomes freely available, open-source protocols will ensure that it can be shared and used across industries. It is possible that public and private enterprises will coordinate to create unified digital ecosystems so that data for multiple use cases can be shared under a common regulatory and cybersecurity framework. We can look at examples of wearable data being ported directly to insurers. Widespread use of IoT sensors will provide personalized data to insurers which will allow safe drivers to pay less premium on their auto insurance and people with a healthier lifestyle to pay less on their health insurance. This is called usage-based insurance which incentivizes more people to buy insurance. Connected – home and car data could be available through consumer device manufacturers and the majors like Amazon, Google, Apple etc.
Breakthrough in Cognitive technology
Deep learning technologies like neural networks used for image recognition, voice and text processing may be extended to other applications in the near future.Such reasoning technologies that are based on the brain’s ability to learn through disintegrating and inference will be used to process copious and complex data streams that will be generated by real-time insurance products linked to an individual’s behaviour, habits and activities. IoT sensors will pr
Widespread use of these technologies will enable the creation of new insurance product categories and engagement methods that respond to change in underlying risks and human behaviour in real-time. This can change the way risks are perceived today and create customized pricing plans for the same risk for different customers
Faster Distribution of Insurance
With the improvement in technology, the onboarding of insurance customers will also become faster creating a win-win situation for both the insurer and the customer. Based on individual behaviour AI algorithms will create customized risk profiles so that the turnaround time for the purchase of vehicle insurance, health, home or life insurance policy is reduced to minutes.
Artificial intelligence is capable of enabling a seamless automated user experience that uses chatbots to pull customer’s social and locational data to personalize the interactions. On-demand insurance may be the order of the day as customers can cover risks for specific items or events.
Vehicle and Home insurance which are already providing instant quotes will continue to improve and add devices that can pick up more data about customer lifestyles and preferences. Once customer health and lifestyle data can be captured using wearable devices, risk can be measured more accurately and life insurance policies can be tailored to risk in a more accurate manner.
Smart contracts using blockchain can enable instant debits from the customer’s account making policy processing faster. Digitization of contract processing and payment verification processes will reduce customer onboarding costs and save time as well. The purchase of commercial insurance will also speed up due to the availability of sufficient data from the internet of things, drones etc to create an accurate quote.
Faster, Customized Claims Settlement
Online user interfaces and virtual claim adjustments will make it easier to collect real-time data from an accident site and settle and pay claims. This will also reduce the possibility of fraud. Customers will be able to select whose premiums will be used to pay their claims, a system which is known as peer to peer insurance or group risk sharing.
It would be reasonable to conclude that technology is going to drive the next decade of changes in Insurance. Increased automation will change the way Insurance is purchased and sold changing the distribution structure. The only catch would be that customers would be required to install telematics or sensors at home, in their cars and even wear them so that real-time data can be monitored. Artificial Intelligence is going to change the insurance landscape forever. Personalized data based on lifestyle and risk-taking behaviour will determine the premiums to be paid. The entire insurance purchase process will be digitized leading to a delightful customer experience. Online interfaces and virtual claim processing will ensure that claims are processed much faster since there is no dependence on external agencies to verify the claim. Sounds like exciting times are ahead for the insurance industry and its customers in the coming decade.