Innovation in Insurance: and the new informants

I recently had a meeting with somebody who is currently engaged in a form of animal testing – on his dog! You may gasp with the insertion of my exclamation but you will be calmed with the palatable detail: he is trialing a new technology that harmlessly monitors his dog's behaviour in order to provide data-driven healthcare and, in turn, a better pet insurance premium. Said individual went on to tell me that an organisation he has recently worked with has started to collect equivalent data relating to motorists; data is already being collated about drivers of vehicles connected to the internet in order to assess their driving and determine the most appropriate insurance premiums.

I have recently met numerous insurance professionals, several of which have similar anecdotes, which has left me astounded at the rate of technological advancement across the industry. On the one hand, this has led many to view the digital era as a threat to traditional insurers, in light of the rapid influx of new entrants and disruptors, such as comparison websites. On the other hand, however, the digital era brings vast opportunities for insurers to transform their businesses – not only for dog lovers and motorists.

Technological advancements, both in hardware and software, already act as enablers for data and analytics, as indicated in the meeting I mentioned above. But it seems this is just the beginning of an era of innovation. Internet connected devices are projected to reach 50 billion within the next three years. This will deliver a significant increase in data volumes available to insurers, and in real-time. In turn, insurers will have abundant opportunities to exploit data for the purpose of improved pricing and underwriting.

As artificial intelligence advances, insurers’ capabilities will be augmented beyond the reactionary. Insurers will be able to use unstructured data to make strategic decisions as well as the reactionary sort enabled by the structured data provided by devices. Facebook, Instagram, Twitter and other social media sites will soon become the insurers’ new informants.