From reactive to proactive – can insurance transform? Part 2

Last post ended with thoughts on how insurers can succeed in transforming their approach from reactive to proactive, and create stronger connections with consumers, who are compelling insurance players to reshape the way they package and sell their products.

Today, this isn’t a technological challenge – all the technologies needed for the transformation are available and mature. The innovation around AI and machine learning, in addition to the proliferation of data and ability to connect to external data sources, offer the opportunity for change and a new type of insurance experience.

This change can best be achieved through implementation of an insurance platform that integrates advanced machine learning models and can support actuarial practices and big data analytics. Such platforms can process millions of events in real time, from flight schedules and luggage tracking to weather forecasts, price fluctuations and delivery schedules. Furthermore, machine learning enables the use of historical data, as well as facilitates a competitive approach to product offerings, pricing, customer communications and claims handling.

A smart insurance platform provides insurers with the ability to automatically and accurately assess endless possible risk scenarios. Applying appropriate mathematical models, it’s possible to predict the probability of customer experience disruption – in terms of frequency and severity – at the highest level of granularity, in order to determine adequate underwriting rules. Additionally, triggers based on real-time data, such as if a flight is late, whether there’s sufficient snow for skiing or if luggage has gone missing, enable automatically triggering a policy and generating immediate payment of compensation.

This is a game changer in the insurance experience, and especially essential for millennial consumers who expect nothing less than proactive, personalised and fully automated insurance products. In fact, consumers who perceive their insurers to be proactive indicated a 15.7% increase in positive experience. Furthermore, 40% of the millennial generation and 45.7% of tech-savvy customers indicated willingness to share their data for the benefit of receiving personalised services.

The benefits of such services are clear:

  1. Proactive predictions of consumers’ individual needs in various areas.
  2. Real-time monitoring of risks and staying one step ahead of consumers to ensure a seamless customer journey.
  3. Worry-free and hassle-free experience through automated claim and compensation processes.
  4. Vast reduction in operational cost required by manual claims processes, enabling insurers to offer services at lower rates making them more attractive to consumers.

Adopting a proactive, millennial-ready insurance approach is becoming inevitable. The ability to predict and respond quickly to shifting consumer attitudes, market opportunities and risks is essential for gaining customers, alongside keeping them happy and ensuring long-term business sustainability.

About the Author
Eyal Gluska’s entire career has been focused on creating innovative services and business models that generate new business opportunities for leading organizations around the world. As co-CEO of Setoo, he wants to disrupt the insurance industry with AI and state-of-the-art machine learning technologies, automating human-intensive operations to transform the way insurance products are created and delivered.