Technology is changing the way all business is conducted, and the insurance industry is no different. Many insurers have already taken to the internet to offer quotes, communicate with clients, and allow policyholders convenient online access to their documentation.
For those looking to buy insurance, this is just the beginning of a major overhaul in the industry. While some industry changes are imminent, others might seem a bit more futuristic—but that doesn't mean we won't see them in our lifetime.
More Technology Is Coming
With that in mind, let's look at a few way technology is affecting the insurance industry. Here are six things that will change how you buy insurance within the near future.
You can already get rapid insurance quotes online, especially when dealing with low-cost auto and health insurance carriers. But customer expectations are changing and it will soon be hard to find an insurance company that doesn't offer quick, automatically generated quotes to those researching insurance options online.
However, many individuals still prefer to pick up the phone or head down to the agency and speak directly with an insurance agent. This in-person interaction helps the person buying the insurance policy feel confident that they are getting the right coverage.
New technology will soon incorporate the experience of speaking with an agent in the online buying process. Video chats with agents or brokers may soon become an integral part of the sales process for insurance companies.
Video conferencing technology is readily available and widely used, so we are likely to see this change coming swiftly. Being able to get quick insurance quotes online and then speaking with a live insurance agent will give both convenience and access to a professional who can answer all of your questions (to find out how these professionals can help you, see Insurance Agents: What' the Point?).
Tech savvy insurance consumers are looking to buy coverage on their smartphones. Even more people are looking for information on the policies they're interested in through their mobile devices, even if they switch to a computer or make a phone call to complete the buying process.
insurers have already developed useful apps for customers looking to
buy insurance. As the trend accelerates, you will be able to deal with
your insurance company entirely through your smartphone and buy your insurance coverage directly through their mobile app.
Wearable Devices and Tracking
Wearable technology might be the piece of technology that brings the most dramatic change to the insurance industry. Once wearable tracking becomes the norm, the insurance industry will never be the same.
Perhaps the most popular form of wearable technology is the fitness tracker. These wearable devices track your level of physical activity by measuring things like your step count and heart rate. As these devices get more sophisticated, they will be able to take a much more comprehensive snapshot of your physical health.
Wearable devices could be used to take daily assessments of your health and fitness and relay that information to your insurance company. Armed with that information, your insurer could offer you a personalized health or life insurance rate based in large part on your lifestyle, rather than simply your age, gender, and other demographic categories.
We're already seeing a similar development in auto insurance. Cars can be equipped with devices that collect data about your driving—how fast you drive, how much you drive, and how often you come to a full stop at a stop sign. Your insurance company can then analyze that data to get an accurate picture of your driving risk and charge a rate that reflects how safe you truly are behind the wheel (see An Intro to Usage-Based Insurance and Telematics to learn more).Real-Time Data Assessment Models
Insurance companies have been improving their risk assessment models for decades, and they are becoming increasingly accurate with every passing year. With more and more real-time data becoming available, these models will only improve in accuracy.
As more information pours in, some have suggested that insurers will be able to use big data analysis to build computational models that can predict disasters before they even happen. We're not at that point yet, but once we reach it, it could make disaster avoidance a reality and many people would find their insurance premiums lowered substantially.
Real-time data collection will allow insurance companies to update their underwriting techniques to make use of comprehensive and accurate data. This could have huge benefits for customers, who will only be charged for the coverage they are actually using. This fine-tuned, personalized pricing will introduce a heightened level of fairness in the insurance industry, compared to the current practice of issuing prices based on data collected years ago.
Many insurance companies are quickly realizing how useful financial technology can be for the industry. With new FinTech, or more specifically InsureTech, startups hitting the scene every day, insurers now have access to a seemingly endless number of cutting edge financial products and services that can be integrated into their own offerings.
Insurance companies that have already taken steps to adopt FinTech have been able to meet the growing customer expectation for convenient, secure services. Lemonade, for instance, provides consumers home insurance on a peer-to-peer model—essentially, a sophisticated and digitized insurance pool. And UK-based Cuvva uses an app to offer micro-insurance products at the tap of the screen, including one-hour-long auto insurance policies.
Blockchain could also have a huge impact on the industry. By serving as a centralized, digital ledger for all parties in an insurance policy, it could streamline and automate many of the processes involved in drafting and managing insurance contracts. The result could be a marked decrease in errors, paperwork, and time expended.
Technology and Insurance
It's impossible to predict what new technologies are on the horizon, so there is no telling what changes are coming to the world of insurance. Current technology, however, is already poised to disrupt the insurance industry and its adoption will soon provide consumers with an incredibly high level of customization, convenience, and cost efficiency (for more technological changes to the industry, see How Smart Devices Can Protect Your Home and Help You Save on Insurance).