Insurtech is a booming market, generating record levels of investment as funding surpassed $15m in the third quarter of last year – which is more than in 2019 and 2020 combined. Mark Colonnese of Aquarium Software writes on the key insurtech trends to look out for in 2022
Insurtech has always been about driving benefits for both insurers and customers by digitising services, but the record investment highlights a greater demand than ever for services delivered in a way that suits policy holders. Businesses and consumers want easy-to-use digital services that offer quick, hassle-free claims settlements.
Insurtech companies continue to be well placed to benefit from the acceleration of digitisation initiatives across many industries, caused in part by the coronavirus pandemic. It has helped them to keep attracting investment from larger insurance companies struggling to innovate their own operations and services. As this thriving market evolves with bold growth targets, here are four insurtech trends to look out for in 2022.
More digital platforms for claims settlements
Insurtech is driven by digitising complex processes and the move from manual claims settlement to digital has been building for some time – I expect it will continue at a rapid pace in 2022. Customers are increasingly looking for insurance to be delivered how and when they want it, through easy-to-use digital platforms that don’t involve much time and effort spent dealing with insurers via call centres.
This demand was boosted by the pandemic as insurance companies moved to keep delivering more services digitally, which has helped fuel the growth of insurtechs offering quick and easy digital claims management through online platforms.
Traditionally, large insurers have found it challenging to innovate at speed, so they are instead partnering with agile insurtechs to transform services for their customers. As more information is gathered to create ‘Big Data’, insurers can use these digital platforms to offer improved customer service and faster claims settlements, reducing the time, resources, and hassle involved.
Improved apps to support faster settlements
I expect the market will see improved mobile apps being developed and launched in 2022 to support faster settlements. Insurance has been traditionally slow to adopt digitisation because it is so complex and there are many legacy platforms that make the process difficult. But, as the desire for quick and easy digital claims settlements grows rapidly, insuretechs will focus on creating faster and more intuitive apps capable of delivering an enhanced customer experience.
This will build on the apps already being used that collect real-time data, like those that record the damage in a car accident to let policy holders upload photos at the scene. Systems like Verisk’s Intelligent Vehicle Inspection (IVI) allow policy holders to share photos of damage around a vehicle. The app can use the images to estimate how much the parts would cost to replace, which in turn confirms if the vehicle is economical to repair or a total loss. Apps like this, that utilise Big Data, Artificial Intelligence (AI) and Machine Learning (ML), can deliver an automated system that pays out claims with minimum fuss.
These apps are getting more intelligent with each new iteration, offering greater capabilities for insurers to meet the needs of their customers in 2022 and beyond. Analytics will continue to improve as ever greater amounts of real-world data are fed into these apps to change the way insurance is managed in the future.
More connected devices and monitoring
Insurers need to measure risk, which means being able to predict the chances that something specific will happen as accurately as possible; the more information they can gather to do that more effectively, the better. This is likely to drive more monitoring in 2022 through an increased reliance on connected devices like sensors and wearables – such as in-car location devices and fitness trackers.
For instance, in the pet insurance market, the use of devices like fitness and location monitors for dogs and cats help insurers understand patterns of exercise. Using this technology may be incentivised to policy holders through price reductions in exchange for sharing data. As more information on pets, their susceptible conditions and long-term cost is gathered, insurers can feed the data into their digital platforms to make better decisions on pricing products. This process applies to all other insurance markets too.
We may also see insurers tapping into more data from other connected devices like home assistants and smart phones. The number of devices people have is growing, with estimates of up to one trillion connected devices by 2025. Insurers can use this information to better understand policy holders and their routine behaviour, which can lead to new product categories, plus more personalised policies and pricing.
Greater use of data analytics is one of the biggest trends for insurtech in 2022
Insurers are now much better placed to adopt technology to solve business problems. Data analytics will continue to be a major growth area in the next twelve months as insurers look to make more of the customer data they are gathering, not just from a single policy but across multiple policies.
We are already seeing discounts offered for multi-car insurance policies and I expect this trend to continue with insurers offering, for example, incentives and discounts to customers on health insurance if they are particularly active dog owners.
The growth of AI and ML means digital technology can process extremely complex data sets more quickly and advise the most efficient or effective solution to a complex question. By understanding more about consumers wider behaviour, insurers can use technology to piece together risk and provide a more competitive offering across multiple insurance products.
Mark Colonnese is the VP Core Pet Insurance Solutions at Aquarium Software