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Disruptors Changing Auto Insurance Policy Administration

Insurance executives understand that staying competitive amid sweeping changes in a digital world will require unpreceded levels of innovation. As insurance technology continues to evolve, insurance policy administrators now have more applications for emerging artificial intelligence (AI) and machine learning (ML) functionality to power the full lifecycle of claims processing. 

Auto Insurers Set Themselves Apart By Implementing New Technology

Companies that adopt technology-fueled advanced claims processing may see an immediate reduction in certain costs, resulting in better returns on their investments. As digital technology works its way into the insurance sector, companies that decline to keep pace with their competitors will be left behind. 

Auto insurers who put sensors in vehicles (with the owner's permission) can offer lower, behavior-based, premiums. As consumers seek to save money in the face of rising inflation, this feature has the potential to set insurers apart from their competition, allowing them to grab a bigger piece of the consumer insurance pie. 

Large companies with the resources to offer tailored insurance products well-targeted to consumers who are currently unsatisfied with their legacy insurers can more effectively manage policy risk by leveraging data about driving habits. The insurance industry commonly uses an outdated business model. High-risk drivers receive the financial benefits of low-risk drivers contributing to their payments through premium calculations that depend on market averages based on general risk categories like the claims history of people in a certain age group or those of a certain sex. This model doesn't work to the advantage of safe drivers. 

Auto manufacturers are on the brink of changing how insurers rate individual drivers. New cars fitted with connected devices designed to collect information about an individual driver's habits have the potential to disrupt the entire auto insurance industry. This type of unique data could help insurers dial in on an individual driver's actual risk of making an auto insurance claim, instead of using averages and algorithms to predict the future. 

Insurers can choose advanced technology to them flourish in the digital age without sacrificing risk mitigation. 

Lower Costs, Higher Growth, and Happy Customers

Customer expectations are transformed by technology, with more people expecting a simple online experience that includes instant answers to their questions at any time of the day or night, one-click shopping, relevant pricing and feature information, and tailored services compatible with the digital age. 

Insurers must meet the expectations of their customers to retain their business and attract new customers through referrals. Customers have the same expectations across all industries, including auto insurance.

While the traditional insurance business model is resilient even in the face of sweeping technology-fueled changes, the industry must respond to customer demands about how companies deliver products and services. Over time, changing auto insurance policy administration will also change the nature of the products and services provided by insurers as they seek to remain competitive. Companies that move quickly to confidently adopt and implement data-driven services set themselves up for long-term success, even as they prepare to dedicate significant financial resources at the outset.  

While some insurers resist changes to how they do business to avoid revamping their technological platform, eventually, they must meet their customer base's demands to stay competitive in the marketplace. 

Unfortunately for insurers, new research shows that although consumer demand for digital technology can help companies win in the marketplace, for many, the initial investment of time and money temporarily depletes assets. For example, automation has the potential to reduce the cost of a claims journey by 30%. However, the initial investment can seem prohibitively expensive to traditional insurers with a company history spanning many decades when reducing costs has been their past primary objective. 

It's Time For Insurers To Get Data-Driven Assistance Designed To Help Meet Consumer Demand

Companies must prepare for the future adoption of advanced analytics. It's essential for insurers who understand how important it is to integrate AI and ML to fuel advanced claims processing to lay the groundwork now.

Going beyond an isolated use case for advanced technology and instead embracing a culture of digital transformation, insurers who use an IRM platform can achieve a 9% reduction in the Total Cost of Risk (TCoR). Integrating all of the company's data from external and internal sources in a single system while using information about risk mitigation activities across the industry provides valuable insight designed to assist insurers as they work to monitor and lower TCoR. 

With Ventiv's Risk Management Predictive Analytics Software, your company can augment risk and claims data with our benchmark dataset of more than $30Bn in closed claims. We provide insurers with real-time insights that aren't available with a traditional approach. Get the data-driven assistance you need to prioritize your time and resources, predict outcomes, and generate ROI.

Contact Ventiv Technology today and access valuable insights designed to help your company remain competitive as technology changes auto insurance policy administration. 


Apr 21, 2022

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