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How Modern Technologies Are Shaping InsurTech: AI, Blockchain, and AR use cases

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Vik Bogdanov
Chief Marketer

7+ years promoting tech solutions.

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Of all FinTech-related industries, InsurTech has the most favorable prospects. The pace of its development is impressive. In 2018, global investments in InsurTech doubled compared to the previous year reaching over $3 billion, and we saw 13 global InsurTech deals worth of over $100 million including $375 million Oscar Health Insurance deal in the USA and 200 million PolicyBazaar deal in India.

InsurTech is, essentially, the fusion of insurance and technology. Investopedia gives it the following definition: InsurTech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model.Yet, to fully benefit from InsurTech and positively disrupt the current insurance industry, organizations now have to meet the growing market demand for innovation and go far beyond the standard expectations for customer service, AI application use cases in InsurTech and big data analytics.

Many factors, however, are slowing down InsurTech adoption. Legacy infrastructures and processes, security concerns and regulatory restrictions are just some of them. The digital transformation isn’t happening as rapidly and smoothly as expected due to the global lack of InsurTech talent. Niche experts proficient in InsurTech software development are scarce, so organizations often have to settle for less qualified specialists and watch them learn on the go.

Meanwhile, the successful adoption of emerging technologies by companies who have managed to bridge the talent gap is reshaping the insurance industry landscape. Below are some of the most spectacular examples of AI/ML/NLP, blockchain and AR/VR use in InsurTech.

How AI/ML/NLP Affects InsurTech

Omni:us, the EU-based company that had raised €19.7M ($22.5 million) in funding from IBB Berlin and individual investors, is now bringing AI services to half of the top 10 insurance providers in the DACH (Germany, Austria and Switzerland) region. The company uses Natural Language Processing to classify and extract valuable data from documents, some of which contain handwriting. Via NLP, the company harnesses artificial intelligence to derive essential insights from data.

In the United States, several insurance companies are using machine learning to optimize business processes and bring better customer services. For example, in 2016, State Farm introduced its Drive Safe&Save program, leveraging ML to track driving patterns and offer insurance discounts to safe drivers. Insurance companies are also increasingly applying ML to create virtual assistants and to carry out advanced insurance market analytics.

Blockchain Use Cases in InsurTech

Blockchain is now revolutionizing many industries. Applied in FinTech, it facilitates financial inclusion of the unbanked population of the world’s impoverished regions.  SURETY.AI, for instance, uses blockchain to bring microinsurance services to people in Asia who do not have a bank account. The project applies blockchain and AI tools so that billions of unbanked and uninsured population could benefit from microinsurance.

Organizations are increasingly using outsourced InsurTech development to сreate blockchain-based solutions for B2B clients. Thus, the Platform For Trading Insurance Assets, a blockchain-based marketplace enabling insurance and reinsurance companies to connect with investors and trade insurance-linked securities, is now at its MVP stage. Built by the dedicated development team in our Offshore Development Center in Ukraine, the platform will act as a decentralized marketplace for structuring, issuing and trading insurance assets.

Read our InsurTech client case:

Platform for Trading Insurance Assets: MVP

AR/VR Use Cases in InsurTech

The areas for immersive technology use in InsurTech are numerous: risk assessment, customer education and remote guidance all call for AR/VR application. AR/VR claims processing, remote damage inspection, and loss calculation also fall under this category. Apart from other applications, AR/VR is also used for disaster recreation and estimation of insurance payouts and repair costs.   

Insurers apply AR/VR for employee education as well. Zurich Insurance, a Germany-based company, uses immersive technologies for remote guidance, and AR/VR to train its staff. During training sessions, employees can point their devices at posters that launch videos with a training course or open a book with course-related information.

AR/VR technologies are increasingly applied to introduce more efficient, and custom tailored insurance services. For example, a UK-based InsurTech company Allianz has launched a customer-oriented AR service targeted at pinpointing possible dangers customers may come across within their homes. By using a mobile app, customers can scan their homes and see dangerous zones (gas leakage, possible pipe breaks, etc.) on display of their devices.

Clearly, emerging technologies are enabling insurers to introduce better services and add value to their products.

How businesses eliminate obstacles in the way to massive InsurTech adoption 

Ironically, developed economies with strong market demand for InsurTech solutions are also the ones suffering from an evident lack of InsurTech talent. As of today, InsurTech stack includes in-depth knowledge of ML, NLP, big data analytics, Python, Ruby, PHP programming languages, blockchain, API platforms, etc.   

Developing in-house InsurTech solutions takes time and involves headhunting and hiring experts, which, most likely, will command six-digit salaries. Moreover, at least one senior developer on your InsurTech development team should have experience in the insurance field to educate others. Increasingly, though, businesses are starting to recognize the benefits of outsourced InsurTech solutions and are using staff augmentation or an outsourced development model to gain access to global talent.  

The prospects for InsurTech growth in 2019 are optimistic. This year, according to insiders, many established insurance companies will be rethinking their data strategies and using big data tools to transfer their legacy data into readable and manageable formats. This will give them previously unthinkable competitive edge empowering them with historical correlations and insights. The InsurTech marketplace is also bound to get more crowded with giants like Google and Amazon planning to tap into this lucrative niche.

Under these circumstances, ditching the conventional mindset and outside-the-box thinking could help InsurTech companies stay afloat. One thing is sure: once businesses solve the issue of talent shortage (through outsourcing, globalization and cross-border collaborations), they will be able to stand up to increasing competition, and InsurTech will get a considerable impulse to develop further.

Do you need help building a dedicated/extended Team or getting ad-hoc resources for your software development project fast and cost-effectively?