Emerging technologies, such as drones, blockchain and artificial intelligence, are creating exciting opportunities for the insurance industry to provide new and expanded loss prevention services to clients so we’re taking a closer look at four of the top technologies being used within the insurance industry.
What is loss prevention?
Loss prevention is a risk management technique or practice that is designed to reduce the likelihood of a claim being made against an insurance policy. If a loss or claim is made, loss control also seeks to reduce the severity of those that do occur.
Loss control involves identifying the sources of risk, and is accompanied by either voluntary or required actions that a client or policyholder should undertake in order to reduce risk through safety and risk management information and services.
Emerging technologies present various opportunities to insurance companies and policy holders to control loss and also provide insurers with better, more efficient risk management practices. Let’s take a look at some of emerging technologies that offer significant benefits for loss control.
1. The Internet of Things
The Internet of Things (IoT) is the network of physical devices, vehicles, home appliances and other items embedded with electronics, software, sensors, actuators, and connectivity which enables these devices to connect and exchange data.
Let’s take an instance of property risks. The IoT will allow risk to be much more easily identified and mitigated through the use of connected sensors installed within the insured premises. Not only the technology holds good for property risks but also for business interruption, marine, and even healthcare. The technology reduces the risk of the insurers and also helps them provide their clients with valuable risk insight. Technology has enhanced the value-added services of the insurers and has assisted them in account retention.
Another technology that is piquing the interest of insurance companies is drones. This unmanned aerial vehicle provides useful ways for insurers to improve business functions such as claims management and underwriting.
Insurance is, at its core, a business of assessing, preventing, and mitigating risk. By using drones to gather photos, video, and data about a property is a big leap in the technology, but the real benefit of drones being used in insurance comes from the gains in safety and efficiency. Drones allow easy access to some of the isolated and dangerous areas to effectively collect aerial data and assess loss after a man-made or natural disaster through cutting-edge imagery analytics. Companies can move from dangerous, hands-on, time-intensive property inspections, to a quick, safe, and much faster process that allows their workforce to keep both feet firmly planted on the ground.
3. Blockchain and Blockchain-enabled smart contracts
A blockchain is a decentralised database or “digital ledger” used to store static records and transaction data that allows consumers and suppliers to connect directly, removing the need for a third party. This network is essentially a chain of computers that must all approve an exchange (update or addition of information) before it can be verified or recorded permanently on the Blockchain.
Insurance industry experts believe that the innovative distributed ledger of Blockchain can introduce improvements and efficiencies that complement the insurance landscape. These changes include establishing a level of transparency and accountability, mitigating risk and fraud detection, streamlining paperwork and reconciliations for insurance contracts, a reduction in average claim cost related to claims administration, and providing easier and improved access to parties. In fact, experts believe that Blockchain is beneficial in eliminating errors, detecting fraud, and negligence as it provides a decentralized digital repository to independently verify the accuracy of policies, claims, and customers.
4. Artificial Intelligence
Artificial Intelligence, (commonly known as ai) encompasses everything from machine learning, automation, chatbots, predictive recommendations and algorithms.
As artificial intelligence is starting to be applied in efforts to improve the current claims processes used within the insurance industry it has also been successful in enabling both large and small insurance firms to offer services at the level of sophistication, customization, and scale never previously possible. These cognitive agents help insurers to collect an enormous amount of real-time data through software-client interactions which will further allow them to the gain deep insights into each of their clients’ needs and offer personalized services accordingly, thus preventing the loss.
The ubiquitous adoption of digital technologies is not only providing enough opportunities to prevent loss but also to provide improved customer experience, increased governance, and better risk selection.
The insurance industry has not always been viewed as ‘early adopters’ of new technologies however the combination of a new way of thinking and the use of these emerging technologies has great potential to completely transform how insurance companies and policy holders mitigate risk and we’re looking forward to seeing how it is adopted across broking, underwriting and claims.
To find out more about how GB is adopting technology to improve current claims processes, or to speak to an expert, click here.