Digital disruption could cost insurers 40% of revenue within 5 years (Accenture)
Customers increasingly expect their insurance providers to treat them as their digital service providers do, offering easily accessible, ‘frictionless’, personalized digital services that enhance day-to-day life over the long-term.
Digital transformation for insurance
The potential of digital technologies is huge, with scope for insurers to change their business models as compensators of accidents to preventers: Insurers can even use analytics, with data pulled in from smart homes and connected devices, to intervene before an incident happens in the first place. Smart insurers are plugging into their consumers’ lives and wider eco-system to look after the asset or risk they want to protect.
Wearables are being embraced not only by consumers, but across industries – including life and health insurance – because they provide unmatched opportunities to gather relevant, real-time data and improve business decisions. It is not surprising that life and health insurers are leveraging wearable and other sensor-based devices as tools to better engage with customers and more accurately underwrite risks based on real-time customer data.
As reported in the Top 10 Technology Trends in Life Insurance: 2018 report, wearables can be a boon to the life insurance industry, which traditionally has had limited opportunities for customer engagement. Life insurers often only interact with customers in the form of a bill or statement, and even then, as rarely as once a year.
According to Gartner, there will be 26 billion connected devices in people’s homes by 2020. By then, the connected devices manufacturers will generate additional revenue of $300 billion, leading to approximately $1.9 trillion in global economic value-add. Smart home is not just about letting our home appliances talk to each other; it offers a lot more than that. It offers comfort, security, and risks control to homeowners and tenants.
For insurers, the promise of the connected home is tied to prevention – moving insurers away from only paying claims, to taking on a more preventative role that can unlock additional revenue streams. Other than mitigation of claims, smart homes bring the possibility of creating positive interactions with customers by preventing risk. Integrating insurance into smart home provides long term savings for customers, and more importantly provides safety protection against the risk. As risk experts, insurers can have a leading role in this connected ecosystem in order to make people safer at home. Customers will probably be willing to pay higher premiums for greater security and greater ability to anticipate and mitigate unavoidable risks.
Predictive analytics power cyber-insurance industry
By getting customers to opt-in to wearable programs in exchange for rewards or discounts, life insurers can gather real-time data from their customers’ wearables and other sensor devices and apply data analytics to generate granular insights that can help them design and customize products based on an individual customer’s risk exposure. We work with health and life insurers to provide their members with their own virtual health coach. To provide a personalized solution on a large scale, our health coaching is a smart, seamless blend of AI and human conversation that turns huge amounts of data into insurance knowledge:
- Empowering analytic business decisions by connecting actuarial results with profit and sales force
- Helping technical and non technical users run analysis automatically, leaving professionals to focus on harder projects that require internal knowledge to conduct.
As an added incentive for both customer and insurer, with the help of wearable devices life can provide notifications to control risk in the event of a building or sudden adverse health condition. As a further form of engagement, insurers can leverage communities of interest while improving members’ health and gathering valuable data about life events that offer excellent cross sell opportunities.
The large volumes of customer data collected by wearables and other sensor-based devices can also generate informative insights to drive better business decisions. Continuous customer monitoring helps to identify the lifestyle and life-stage needs of already-existing customers while attracting new customers with more targeted products. Wearables also help insurers gather insights across the value chain, which enables product customization (front office), more accurate risk assessment and pricing (underwriting), and timely customer notifications that can improve life expectancy.
Also published on Medium.