It's been said time and again (and again) how the insurance industry, with its cautious nature, tends to lag other industries in hopping on the next-big-thing technology bandwagon. However, unconventional applications of big data and predictive analytics will sooner than later become the norm in all industries, including insurance. Those applications will provide a new perspective on what we think of as the more foundational technology of risk management and analytics. Here are two examples that show how our personal, business, and online lives are only becoming larger parts of business platforms now and in the future:
Telematics, while seemingly cost-prohibitive for some carriers, is gradually gaining ground and breaking new ground. How? Take a look at a recent Ernst & Yount report, "The Quest for Telematics 4.0." A few interesting observations:
- The U.S. will continue its lead with sales of approximately 16 million new cars with embedded telematics by 2025
- the global telematics market is poised to hit approximately 104 million new cars with some form of connectivity by 2025
- the penetration of integrated telematics will be driven by the growing importance of smartphones and regulations for driver safety
While the origins of telematics are in safety and security, other functions, such as remote diagnostics and Internet radio, are adding to the value proposition. These are enabled by cellular, Bluetooth, and Wi-fi technology embedded in cars. Further fueling this trend is an explosion of smartphone apps that may be relevant in a car. Pay-as-you-drive may be just the first of other insurance-specific functions that ultimately may include many more competitively advantageous offerings that boost customer service and reduce costs.
Aerial imagery will soon be a viable alternative to exterior inspections and save insurers on the annual $100 million tab for them, according to Verisk analysis of carriers and their inspection programs. But that advancement won't address internal inspections. Can technology come to the rescue? Yes, with smartphones.
A smartphone can guide insurance buyers through a short tour around their homes to take photos and document the necessary information to complete an internal inspection. They can take photos of the kitchen, the breaker box or fuses, heating/AC unit, water heater, or any other component for which an insurer needs a visual image. Time stamping and geocoding embedded in the photo will ensure the photo is current and taken at the property address.
[Related: How Amica leverages advanced mapping]
And that's just homeowners. What about all the ways a smartphone can apply to commercial coverage?
Cautious insurers, take note: Mobile technology is fast becoming one of the most disruptive forces ever known, altering how customers do business and how business gets done. In future blogs, I'll share some views on other key elements of this trend for insurers -- the related disruptive effects of big data, predictive analytics, and risk assessment.
About the author: Chris Perini, CPCU, is vice president and chief marketing officer of Verisk Analytics.
[To learn more about new opportunities in mobility in financial services, register for Interop here and check out the “New Opportunities for Mobility: A Financial CIO/CTO Roundtable” session on October 3 in NYC.]