Looking ahead: the future of insurtech

Piotr Piękoś, insurance practice lead at Future Processing, outlines how the sector can look to optimise AI to assess risk and streamline back-office processes.

Insurtech refers to technology-enabled innovations designed to find cost savings and drive efficiency in current industry models. By using technology such as data analysis, AI and big data, insurers are better positioned to offer user-friendly solutions that streamline the customer experience.

Whilst the insurance industry has traditionally been product-focused, changing consumer expectations mean insurers need to start putting customers at the centre of their business operations.

Insurtech is being increasingly used to more effectively process claims, evaluate risk, process contracts and underwrite policies. Bringing benefits of efficiency, flexibility and reduced operating costs, insurtech businesses have grown significantly over the last decade, with investments in Europe growing by 31 percent during the last two years.

Optimising AI

AI has been game-changing for the insurance sector with more data available to assess risk and streamline processes. AI gives insurers the capability to achieve more and reduce the time spent on manual tasks, whilst reducing the number of errors that occur. This allows businesses to move resources where needed, creating new opportunities to uncover insurtech efficiencies.

Insurers’ operations can be significantly improved with AI implementation, including underwriting, claims, customer service and fraud prevention. Customer experience can also be streamlined with the use of chatbots and voice assistants.

Future Processing’s recent survey, however, uncovered that 85 percent of those surveyed believe insurance businesses are not considering AI to improve their overall customer experience. This highlights that there is significant room for improvement, with businesses left considering how to better utilise AI’s capabilities for round-the-clock services whilst maintaining a high quality of service.

In addition, AI has a significant part to play in detecting fraud, as it can be used to analyse large amounts of data from multiple sources. For instance, an automated system can detect fraud by identifying patterns in vehicle damage data. A study from The State of Insurance Fraud Technology found that 80 percent of respondents said they utilised predictive modelling for fraud detection, with this figure increasing significantly from 55 percent in 2018.

ChatGPT for customer experience

The introduction of ChatGPT has also driven innovation, reshaped traditional practices and enabled insurance companies to improve their customer experience. ChatGPT allows insurance companies to provide real-time assistance via chatbots, as well as respond to customer complaints or queries, and provide necessary updates to customers about their policy or coverage. This feature allows customers to get quick and effective responses without waiting for a customer service representative.

Additionally, ChatGPT uses its advanced algorithms and customer data to deliver personalised policy recommendations to customers. This level of personalisation can allow customers to find the best coverage for them, raising the chances of purchasing a policy and promoting greater customer loyalty in the longer term.

ChatGPT can also assist insurers in underwriting, which is one of the most crucial components of the insurance sector. It helps insurers evaluate risk profiles more efficiently by evaluating client data and producing risk scores. What’s more, it will alert insurers to potential risks meaning they can make decisions and respond accordingly – thanks to the streamlined underwriting process that combines human expertise and AI-powered support.

Whilst ChatGPT brings numerous benefits to the insurtech sector, it does not come without its risks – especially when looking at the cost, its impact on customer trust and tight industry regulations.

Don’t lose focus on cybersecurity

Insurtech holds immense promise for the insurance industry, but there are ongoing security concerns that need to be taken into consideration. In Future Processing’s insurtech survey, 81 percent of respondents said they believe that insurance companies need to offer better cybersecurity policies.

This demonstrates that as more and more processes turn digital, it is crucial for companies to take a step back to truly understand how they approach cybersecurity.

Now is the time for companies to change their mindset to establish a proactive cybersecurity approach. One way to do this involves implementing AI into cybersecurity systems, meaning businesses are better able to identify and respond to threats, reducing the time and resources needed to manage cyber risk.

AI-driven cybersecurity risk management is quickly becoming an essential tool for insurers, as it can reduce their exposure to cyber risks, help them better understand their customers’ risk profiles, and improve customer service.

The future is bright

With ongoing technology developments in the realms of AI and ChatGPT, and concerns around data privacy, the future of insurtech centres around quality. Not only will this allow insurers to get to know their customers better, but it will also help them to significantly improve the customer experience in the long term.

Insurtech is a stable sector that will continue to innovate in the future, bringing new efficiencies and creating new opportunities in emerging markets. The future of insurtech is bright and with the implementation of new technologies, insurance companies can look to strengthen their services for the better.