Blog: Digital is changing insurance
Digital innovation is changing the way the insurance industry operates, with providers beginning to embrace developments where technology can make life easier for the consumer.
In order to achieve this, brokers and insurers are increasingly turning to insurtech. Already, exciting new developments in this area, such as telematics, connected homes and big data, are having a huge impact on the insurance industry.
The concept of connected homes in particular could add real value to home insurance. This technology not only has the ability to identify any water pipes that may be leaking when you're away from the house, for instance, but also includes apps that manage everything from heating and cooling to alerting the homeowners of a fire or a break-in.
Digital Insurance Collective
Think digital is important to your role? Want to learn more about how the industry is embracing rapid change?
Keen to meet other like-minded peers and participate in interactive debates?
You need to join the Digital Insurance Collective! The FREE meet-up group dedicated to waking up insurance! Click here to rise and shine by bringing digital into your world.
Technologies such as these may change the way that consumers identify and mitigate a wide variety of risks in the home. The challenge will be to collect the information and data from this technology and identify how this will amend the risk profile, and ultimately the price. It remains to be seen whether developments in the connected home will replicate the impact telematics has undoubtedly had in motor insurance. After all, the connected home does not resolve every issue: homes are still vulnerable to flooding, storms and other natural events.
Looking across to other parts of the financial services arena, an interesting Fintech development that is emerging is around the provision of robo-advice, online tools that provide algorithm-based portfolio management advice. This is already live and being used in the wealth and mortgage space, with technology providing automated advice. The systems, for example, ask potential clients to fill in an online form detailing circumstances and needs, and an algorithm recommends the optimal product for them. This technology is filling a known advice gap in these markets.
Underlying most developments such as connected homes and robo-advice is big data, which is becoming a talking point across this sector – and for good reason.
A wealth of customer data is now available at the touch of a button and, if used correctly, could potentially make the insurance-buying process much faster, more efficient and easier for consumers. Many of the questions that are asked by insurers could be answered in whole or in part by data that is already available.
Research has shown that on home insurance, for example, the optimum number of questions consumers would like to be asked is around five. Within a year or two it may be possible to make this a reality. Consumers are becoming more comfortable and indeed are demanding further developments that make the process easier, such as purchasing goods and services with just one click. Why should financial services be any different?
The use of big data does, however, needs to be approached with caution. There is a downside to having so much data readily available. A ‘data underclass' could emerge as technology becomes more sophisticated. For example, there is the danger that people could become less insurable or even uninsurable due to their lifestyle or characteristics, as companies use data to enhance risk selection - targeting positive factors and moving away from less desirable profiles.
The advent of Flood Re may provide early evidence of this. The widespread use of flood mapping and more sophisticated geographic profiling has led to the need for an industry response for these people ‘selected against' by the use of data.
Ultimately, the main challenge for insurers and brokers will be to work collaboratively as new technology emerges. Finding solutions together that ensure data and technology can be used when required is paramount. We must remain curious and entrepreneurial, taking the opportunity with both hands to adapt and innovate for the benefit of our customers and the industry as a whole.
Kevin Roberts
Broker and affinity director, Legal & General
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@postonline.co.uk or view our subscription options here: http://subscriptions.postonline.co.uk/subscribe
You are currently unable to print this content. Please contact info@postonline.co.uk to find out more.
You are currently unable to copy this content. Please contact info@postonline.co.uk to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@postonline.co.uk
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@postonline.co.uk
Most read
- Esure offers customers six-months free cover for latest tech glitch
- LV’s Mike Crane leaves insurer
- Big Interview: Jason Storah, Aviva