The Innovative Approaches Redefining the Insurance Sphere

Innovation is present across many industries; as businesses and consumers adopt new technologies, those skilled at quick adaptation rise to the top of their market. Insurance companies are among the many who are trying to incorporate the latest technologies to improve efficiency and customer experience.
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By Peter Rakowsky
Global Innovation Manager
The Innovative Approaches Redefining the Insurance Sphere

However, despite massive efforts, many insurance companies still have a long way to go before catching up with consumers' expectations. According to the research by Deloitte, the following factors are impeding the growth of insurance companies:

  • Lack of expansion resources
  • Silo structures that block the flow of ideas
  • Failure to outsource innovative skills from other industries
  • Lack of incentives
  • Absence of architecture that fosters extensive collaboration on sustainable innovation
  • Inability to attract and maintain top talent
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With all of this in mind, let's look at the hottest technology trends reshaping the insurance domain, and how insurance companies are faring with their adoption.

Insurance Innovation: Micro-Insurance

Micro-insurance is the practice of providing coverage to low-income households or people with meager savings. The policy compensates for death, injury, fire, illness, earthquakes, and other calamities.

This low-income insurance is one of the best risk-mitigation tools available for what has traditionally been an ignored population. Because it addresses the needs of a large group that has previously been overlooked by insurance companies, it is an innovative and profitable product.

However, insurance companies only succeed with micro-insurance by taking it seriously, rather than considering it merely as a necessity in meeting regulator policies. Take Etherisc, a Munich-based firm. The company partnered with Oxfam to provide micro-insurance through a blockchain platform, intending to make claim processing practical, fast, and straightforward.

The critical point to remember in this market sector is that micro-insurance can get complicated and risky when dealing with large volumes. If your business chooses to invest in micro-insurance, consider partnering with an experienced company like DataArt to create scalable technology that will streamline your processes and expand your business processes.

What's exciting about this insurance trend is that practically every area of micro-insurance can be technologically enhanced. Think of mobile solutions that make client onboarding, pricing, behavior tracking, marketing, and data mining more accessible. Offering micro-insurance services can help to minimize your expenditure as your client base blossoms.

Insurance Innovation: Blockchain

Although Bitcoin is still not widely accepted as a worldwide currency for daily use, its native technology, blockchain, is widely utilized by various industries. Blockchain technology relies on a decentralized platform, with the best security in the world.

Utilizing blockchain tech is a crucial, innovative strategy that can put insurance companies on the map. Thanks to its tenet of decentralization, all departments (from IT, claims processing, and underwriting) can access records simultaneously. This saves a significant amount of time and effort in record keeping and information processing. 

In addition to the benefits mentioned above, smart contracts can also improve underwriting efficiency. Remember that blockchains share data with all departments, including third parties providing valuable data, such as meteorological agencies and field agents. With all this accurate data so easily accessible, insurance companies can evaluate risk with minimal effort. Also, as data accuracy is more reliable, fraudulent claims are less likely.

There are already plenty of companies using blockchain to streamline their processes. Etherisc (Germany), Beenest (San Francisco, CA), and Guardtime (Irvine, CA) are just a few. Blockchain is a technology that can single-handedly streamline company operations.

More Blockchain Success Stories

While the process of using blockchain is quite simple, implementing this technology into your business processes remains challenging. Partnering with an experienced IT solutions provider with blockchain experience is the smart solution to becoming a modern insurance organization. DataArt is a global engineering firm with over 4,000 completed projects and a prestigious client roster, including the likes of NASDAQ, Zesty, and a diverse portfolio of insurance organizations. When partnering with us, you can rest assured that your tech needs will be handled professionally and expertly.

Insurance Innovation: P2P Approach

In the P2P model, a group of individuals, friends, or relatives create a pool of resources to cushion themselves against the unexpected. Peer-to-peer arrangements in insurance help to bolster transparency because, when an incident occurs, claims are processed immediately. And if the coverage is insufficient, the reinsurer will cover the difference to ensure damages are met.

In a P2P environment, the core element is trust. This means the chances of fraudulent claims arising are negligible, and each individual is motivated to keep a low-risk profile because it directly affects the entire group's combined risk. Towards the end of a policy, unused arrears return to the owners. This does not happen with traditional insurance firms as reserved premiums are not paid out. Many people believe that modern-day insurers rely on bureaucratic intricacies to avoid paying claims or returning premiums.

This challenge — and many more — has made P2P insurance an emerging trend as financially savvy consumers prioritize the assurance that they will be fully compensated. However, to set up an effective P2P insurance strategy, businesses need technological tools to ensure client onboarding and payment processing are trouble-free.

Blockchain technology and its underlying currencies (like Bitcoin) can be used to enable straightforward deposits and faster smart contract execution. Since the whole idea of a P2P model is to simplify processes, online payment methods and online forms are a must.

There are many compelling reasons to add P2P insurance to your company's services, including lower operational costs - translating into lower premiums and, therefore, more customers. Online peer-to-peer insurer, Lemonade, is the perfect example of this in action. Others include Tong JuBao (China), Friendsurance (Germany), and Guevara (UK). Talk to a technology consulting firm, like DataArt, to understand how your business can develop this lucrative business area.

Insurance Innovation: Robo-Advisors

Meeting clients' needs at any time of the day, and without delay, is a priority for most companies. But since this is an almost impossible task for a human workforce, artificially intelligent tech, like robo-advisors, are needed to step into the breach. Properly deployed robo-advisors can handle routine or repetitive insurance operations that don't need human intervention - like collecting customer data, processing queries, and even underwriting new policies. This technology could eventually replace brokers and automate most duties, while still offering customer support similar or better than that provided by humans.

Robo-advisors are already a standard practice in wealth management and financial services. Once trained, they run according to a set script. Lemonade is a great example: they are a fully digitalized insurance company that deploys its services almost entirely through virtual assistants. Initially, it used Jim and Maya (AI assistants) to perform simple operations. In 2017, Jim successfully executed a theft claim in just 3 seconds. More recently, Lemonade has used Maya to sign up new customers, assign premiums, cancel policies, file claims, and resolve customer issues.

A robo-advisor can help cut costs while improving customer experience. Check out DataArt's expertise in this area to see how we can help you get this tech up and running smoothly.

Insurance Innovation: Gamification

Gamification is an insurance industry innovation that is rapidly gaining traction. It's a powerful tool that you can use to activate massive growth in areas with historically low-performance. This isn't new tech, but many insurers have recently adopted it and are reaping the benefits. New entrants looking to create a more customer-centric approach face a low cost to entry - compared to other trends, it is relatively cheap.

Gamified elements can help you to foster closer relationships with your clients, and, once you have a loyal base, your business becomes sustainable. For example, gaming tactics can work on advertising life insurance to millennials on known, popular interactive digital platforms.

Company employees are also a valuable asset that shouldn't be ignored. Through gamified elements, employee behavior can be positively influenced, so workers produce more, learn more, and become more resourceful. American Family Insurance, Lawley Insurance, United Healthcare, SunLife Financial, and Direct Insurance are just a few of the companies that have used gaming tools to drive engagement.

This path, however, does pose risks. Not every game will deliver bang for your buck. Gamification requires an understanding of human psychology and proper deployment of tech, so it's vital to work with a technology solution partner to ensure you set up games that trigger people to play. The game must have both intrinsic and extrinsic rewards.

Insurance Innovation: IoT

If an insurance provider takes weeks to process a claim, they will fall behind the curve and begin to lose customers. The growth of the Internet of Things (IoT) has been a game-changer for businesses and consumers alike, and customers now expect rapid results as the norm. If your company doesn't utilize IoT, you are losing out to your competitors.

IoT is primarily a connected chain of devices - mobile phones, printers, computers, cloud services, and so on. This technology does away with paperwork and the tedious delays caused by the physical exchange of documents. With IoT tech, a customer can quickly upload images of their damaged property; agents can review the data immediately, and process the claim in minutes. The same is true for underwriting. With interconnected devices, all departments can access data simultaneously, adjust premiums, and onboard new clients in minutes.

The immense wealth of data that is readily available because of widespread IoT use also means that you can better know your clients. This allows you to provide them with custom offers, with high conversion rates. You can also detect fraud and create a more accurate business system.

Progressive, a US-based car insurer, is a company that uses telematics dongles and machine learning to observe driver's behavior, so that they can tailor insurance premiums. To date, the company has used this tech to monitor over 1.7 trillion drives. Other insurance companies using IoT include Liberty Mutual, John Hancock, and Metromile.

Insurance Innovation: Usage-Based Insurance

Even if a company adopts every available bit of digital technology, there is still the risk of a flawed pricing model. The only right way to circumvent this issue is with more personalized data, such as in the auto insurance industry, gathering data on driver habits.

With usage-based insurance (UBI), aka telematics, companies can price based on customer driving habits. The worse they drive, the higher the premium, and vice versa. This process is made possible by event trackers installed on users' cars. The device notes down mileage, acceleration, airbag deployment, hard cornering, driving location, and other metrics. So the pricing model becomes unique to an individual's behavior, making it fairer across the board.

Deploying UBI in your business helps you attract low-risk drivers, reduce claim costs, enhance customer loyalty, and even help your customers become better drivers!

Insurance Innovation: Big Data and Machine Learning

Big Data is changing insurance in significant ways. With so many pools of data available internally and externally, companies can now use AI-enhanced predictive models to reveal profitable trends and patterns.

Many insurance firms are using big data and machine learning in pricing and underwriting operations. For instance, Greater Than (Sweden), IBM, and LexisNexis Risk Solutions all use AI-trained tools to perform complex risk assessments and write policies based on individual consumer's behavior.

Life and health insurance companies, on the other hand, leverage the power of wearable IoT devices to monitor a person's behavior before drafting a policy. Claim processing, fraud detection, and customer service are other areas that can utilize trained AI bots to process multiple data streams in seconds and offer reliable feedback.

Without big data and machine learning for process automation and the creation of tools that make marketing and customer interaction more productive, you will lose out to your competitors who are proactively investing in this trend.

DataArt's Approach to Insurance Industry Innovation

The path to becoming a technologically advanced insurance organization and establishing a foothold in your market is not easy. You need to transform operations using the best and most innovative strategies. When building and implementing new technologies, working with a seasoned technology provider like DataArt will allow you not only to save money but become an industry leader. 

DataArt can create custom solutions that promote usage-based insurance, personalization, and better use of available data. We can help with smart contracts to improve transparency, blockchain platforms to distribute data, or simply consult to provide a review of your current tech base. 

Explore More Use Cases and Their Tech Solutions


The insurance industry has been stuck in the past for too long, and continued disregard of technological improvements and evolving customer expectations will stymie growth and lead to failure. Customers are now prioritizing insurers who process claims and address their specific issues as quickly and conveniently as possible.

There are many different technological innovations that you can adopt to prevent customer churn and better your bottom line. The options are boundless; a blockchain pilot program, IoT, micro-insurance, robo-advisors, or gamification. Talk to DataArt for extensive and budget-friendly software solutions.

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