Big data, analytics and advanced technologies are converging to have a profound effect on the insurance industry. Insurers are moving from a business model of indemification to one of risk mitigation. Real-time data generated from “things” like digital sensors and mobile devices is being analyzed by Machine Learning analytic techniques and generating powerful alerts and visualizations for improved underwiting, claims management and fraud detection, property protection, health and wellness management.
Similarly other digital technologies like BlockChain and Digital Ledger Technology (DLT) based on “smart contracts” can improve data privacy and security, improve business processes and data exchange between brokers, carriers and insureds speeding transactions, reducing costs and improving data quality as well. Underwriting applications, first notice of loss reporting, reinsurance accounting, surety bond work in progress reports are just a few of the potential applications.
Insurers’ are looking at new products (usage based and on demand) and incentives based on these applications for improved risks. In the future, continuous risk monitoring will become part of the insurance product and underwriting process. The biggest challenges for insurers won’t be technical or regulatory; they will be internal culture and change management.
Parts of this blog were included in my article in the June issue of Best’s Review, Technology Insights column; read the full article in Best’s Review magazine. http://www.bestsreview.com