By Dawn Mortimer
The insurance industry has a reputation for lagging behind others in adopting technology innovation. However, this is no longer the case. Today’s insurers recognize the incredible opportunity afforded by technology, and know that embracing it will help meet the evolving needs of policyholders.
Specifically, a technology investment in infrastructure allows for the efficient and effective capture, storage, and culling of data—arguably the lifeblood of the insurance industry. Insurance companies are not only investing in innovative technologies to improve their own infrastructures to capitalize on available data, they are also doing so to take advantage of technologies and trends like telematics, the Internet of Things (IoT), and drones. There is no shortage of examples showing the insurance industry’s use of these innovations, and the benefits they and their insureds reap as a result.
Examples of Innovation
Telematics, for one, provides data signals that insurance companies leverage to understand how to rate customers and decide on proper premiums. Insurers also use telematics to keep current with repairs, alerting the insured to the need for tire or oil changes. Telematics is beneficial for in-the-moment decision making as well. For example, telematics can transmit information about an accident to the insurance company in real time. With this data, the insurance company can dispatch an ambulance faster, alert the insured’s preferred body shop and tow truck service, and more quickly start the first notice of loss process—all with the intention of making everything as convenient as possible for the insured.
Adam Waldron, director of information services, Idaho Farm Bureau Insurance, offers another practical use case for telematics. “Idaho has many operations in recreation areas that rent ATVs, boats, and bikes for a blanket premium,” he said. “Telematics allows us to capture actual usage data of these items for our clients so that they can more accurately charge for their rental vehicles’ use.”
IoT is also a hot trend leveraged by the insurance industry, enabling the connected home to transmit data to the insurer that helps mitigate potential damage and keeps the homeowner safe. For example, a home equipped with a water sensor under the refrigerator can detect a slow leak and notify the insurer, who then notifies the homeowner and sends along contact information for contractors that can fix the problem. The connected home can also transmit information about a low battery in a smoke detector, or send reminders to clean out the lint in a clothes dryer.
Certainly, insurers use IoT and telematics to make sure they and their insureds are more proactive about protecting—or, in the case of Idaho Farm Bureau, capitalizing on—assets. On a more personal note, insurers’ use of telematics and IoT sparks a change in the relationship between insurer and customer. In the customer’s eyes, it no longer revolves around rates and monthly payments. It becomes “You, Insurance Company X, actually care about me.”
Drones present additional examples of the insurance industry’s use of technology innovation. In a ranch setting, there may be multiple buildings spread over many miles. Drones can reach these structures more easily than surveyors or brokers and transmit valuable data pertinent in determining policy pricing, issuance, coverages, and exclusions. They can provide data on other hard-to-reach places as well. For example, a broker might be able to determine that a roof is rubber because other roofs in the area are. But a drone could tell the broker and owner that there is standing water on the roof, faulty shingles, crumbling grout, and so on.
Hazards, too, can be detected. “Aerial imagery captured by drones is invaluable to us as we identify risks, such as fire hazards,” says Waldron. “Drones can transmit data about vegetation density, moisture, urban/wild land interfaces—all with the intention of keeping property safe. For us, using technology is all about protecting our clients and helping them understand how they need to be protected when they might not recognize or consider it.”
It’s important to note that putting telematics, IoT, drones, and other innovative technologies into practice involves investment in an innovative core system infrastructure that can support them. As mentioned before, updated technology infrastructures capture, store, and cull data, which ensures better, more targeted insurance products for customers.
Insurance and Technology
Ultimately, innovative technology helps insurance companies and their customers form a partnership with the common goal of being more proactive about protecting assets. It also allows insurers to make the right decisions in the moment. The promise of these benefits alone is enough to spur insurers in their adoption of new technologies. Although it might not be evident at first glance, the insurance industry is hardly lagging in the adoption of new technologies. SW
Dawn Mortimer is data and analytics market strategy director for Guidewire. She is responsible for driving product strategy and marketing for the company’s business intelligence solutions. She has been involved with the insurance industry for 28 years, driving change and bringing new thinking to a valued industry. Mortimer has experience in innovation, strategy, marketing, IT, claims, agency, and product lines. She was most recently responsible for driving innovation by leveraging data through new capabilities related to mobile, the IoT and drones for auto, home, and business insurance.
Dec2015, Software Magazine