The increasing growth in technology means things are changing in insurance — and what these technological changes mean for the future of the industry is pretty exciting. Insurers who embrace these changes and invest in technology stand to benefit the most — and not just in terms of how much money they make.
With technology working its way into insurance, the way customers view the industry will change. Instead of thinking of insurance as something that covers them monetarily when they have loss or disaster, customers will start to see that insurance can prevent those bad things from happening in the first place.
Here are three exciting developments that are set to shake up insurance and are creating excitement about the future of the industry.
The use of smart sensors stands to drastically change the home insurance market. When installed in the home, these sensors can collect and analyse a whole range of data — from how much energy you’re using and how efficiently you’re using it, to patterns surrounding your water usage, giving insurers a better idea of how you use your home and what kinds of risks you face. Smart smoke detectors can notify you on your phone when it detects smoke in your home, and smart sensors on pipes can tell you – or the plumber - when there is a gas or water leak happening (or about to happen). These sensors will reduce disasters that happen, can make sure if things do go wrong they’re not really big, and, because you’re suddenly a less risky customer, will have the added benefit of lowering the amount people will pay for insurance as result.
A number of insurance companies overseas have already begun using technology to monitor driving habits. This technology can give insurers a whole range of information about the drivers they insure — from how often they drive and what times of the day they drive (for example, during periods of heavy traffic), to how much time they spend standing still and when they change speeds. Insurers can then come up with a price (a premium) that is specific to each person they insure, rather than one that is based on the habits of the general population. Young people stand to benefit significantly here because their inexperience typically means insurers view them as a greater risk. But with technology, insurers will have a better idea of whether you actually are a risky driver. And best of all, this technology provides incentives for people to drive safely in order to reduce their insurance payments.
With FitBits, Apple Watches, Nike+ FuelBands and every other thing people are wearing on their wrists to help keep them active and track information about how they move, how many calories they burn and their heart rate, health and even life insurance just became more interesting. As with car insurance, these wearable devices are making it possible for insurers to reward people with lower pricing in exchange for taking care of their health and doing what they can to prevent injury and disease. Insurers are also looking at ways to take things to the next level: For example, it’s possible that these types of devices could soon be used to help predict heart attacks and strokes.