Insurance companies are leveraging the power of emerging technologies to offer customers a better experience and price. Technologies like artificial intelligence and telematics are offering benefits to both insurer and consumer, but a recent Government Accountability Office report warns that the data these solutions produce can be risky with compliance and regulation lines blurred. Read on to learn more.
Incumbent Insurers Disrupting the Market
When you think of market disrupters, you likely think of fintech startups, but incumbent insurers are leveraging technology and customer experience to control the industry. Emerging areas of business are the focus of many insurers with policies being developed for pets, cyber, and even drones. While these new policies have a considerable amount of risk, they are backed by emerging software that enables insurers to gain a full view – a far cry from the traditional tech powering the industry.
“These old systems were not built for the current (or future) market environment with its very specific and demanding requirements around data and engagement that enables us to support today’s very different customer expectation,” wrote Nigel Walsh of Deloitte in a recent article, “Is the insurance core systems the lowest common denominator in the insurtech (r)evolution?”
Read more here.
Greg Donaldson, Senior Analyst at Aite Group shares three reasons that auto insurers should take a closer look at telematics. From improving the bottom line to cutting fraud and improving relationships, telematics offers auto insurers insights into their portfolio and customers like never before.
“Telematics enables auto insurers to move from policies based on static information to ones based on dynamic information,” said Donaldson. With telematics in use, policies are written that reflect a driver’s real risk, rather than a policy based on age or gender.
Read more here.
GOA Highlights Insurtech Risks
The Government Accountability Office (GOA) recently released a report examining the challenges and risks that insurtech can pose to consumers. Insurance companies leveraging AI, big data, and mobile applications can improve customer experience but may fail to keep their data compliant.
“Data scientists who develop rating models may not fully understand insurance-specific requirements, such as setting premium rates that are not unfairly discriminatory and may struggle to measure the impact of new variables used in the models,” GAO said. “Furthermore, data scientists may be unfamiliar with insurance rules and regulations and may not understand how to communicate their work to state insurance regulators.”
Read more here.
