Cornel Schoeman, Chief Operating Officer at GENRIC Insurance Company Limited.

Like every industry, the short-term insurance industry has undergone significant tech transformation over the past decade. This change is largely driven by technological advancements, which have redefined and enhanced customer experiences, streamlined operations, and introduced new ways to assess and manage risk. From artificial intelligence to blockchain, technology has disrupted traditional insurance models, offering both opportunities and challenges to insurers, UMAs and brokers in meeting the needs of the most disruptive force in the sector – the Customer.

Cornel Schoeman, Chief Operating Officer at GENRIC Insurance Company Limited unpacks some of the ways that technology has reshaped the short-term insurance landscape over the last decade – and what it means for customer experience.

The impact of AI and Machine Learning on Underwriting and Risk Assessment

Key in underwriting and risk assessment is the ability to analyse huge volumes of data. AI and machine learning algorithms analyse vast amounts of data from various sources, such as social media, telematics, and IoT devices to more accurately assess risk profiles down to an individual level, and in turn, set premiums based on individualised risk. Predictive Analytics enables insurers to predict claim likelihoods, fraud detection, and customer behaviour patterns, leading to more precise underwriting.

Improved Claims Processing through Tech

AI-driven chatbots and virtual assistants are able to handle the routine customer inquiries and simple claims submissions, speeding up the process and customer satisfaction. We’re now at point where image recognition technology can analyse before and after images and videos to assess damage claims for properties and vehicles, providing quicker and more accurate claim evaluations. Robotic process automation automates repetitive tasks, reducing operational costs and errors, allowing human agents to focus on more complex customer needs.

Internet of Things (IoT)

Technology such as Telematics and Usage-Based Insurance are now a given in virtually every motor insurance solution. This model rewards safe driving with lower premiums and provides real-time feedback to drivers, and fleet owners. This innovative approach not only incentivises safer driving and thus reduces risk, but also aligns premiums more closely with individual risk profiles.

In the home insurance space, building sensors monitor environmental conditions and can revolutionise pricing and claims. Smart devices, such as security systems and water leak detectors help prevent losses by alerting homeowners and insurers to potential issues before they become major problems – such as a burst geyser, or unauthorised access to a property. This proactive approach not only reduces claim incidences, but also encourages preventive behaviour to intervene in a risk that has the potential to become a costly claim.

Blockchain Technology

Blockchain technology is already being used extensively in the insurance and financial markets to enhance security and transparency. Blockchain’s decentralised and unalterable ledger system enhances data security, reducing the risk of fraud. Each transaction is recorded transparently, ensuring that all parties have access to a verifiable and tamper-proof record. Blockchain also simplifies data management, enabling efficient sharing and updating of records between insurers, reinsurers, and policyholders. This reduces administrative costs and enhances collaboration across the industry, which ultimately means better outcomes for policyholders.

Big Data and Analytics

Connected devices have drastically increased the data insurers can leverage across the value chain. Insurers are making significant investments in data analytics and modelling techniques to improve nearly every part of the business. For example, personalised insurance products are a direct result of what big data and analytics brings to the table. By leveraging data analytics, insurers and brokers gain deeper insights into customer preferences and behaviours, allowing for personalised policies and pricing tailored to individual needs and behaviours, improving customer satisfaction and retention. Leveraging big data to improve underwriting and product development will drive revenues and profitability by speeding entry into profitable niches.

It also means more targeted marketing and distribution efforts, enabling insurers to identify and target specific customer segments with customised marketing campaigns, increasing the effectiveness of their outreach efforts, and substantially lowering acquisition costs.

Enhanced Risk Management

Advanced analytics provide real-time monitoring and analysis of risks, enabling insurers to respond proactively to emerging threats. For example, real-time weather data can help insurers anticipate and mitigate the impact of severe storms on insured properties and vehicles by warning policyholders of any preventative actions to take to reduce their risk.

Mobile Technology and Digital Platforms

Insurers have developed user-friendly mobile apps that allow customers to purchase policies, file claims, and manage their accounts on the go. This convenience enhances customer engagement and satisfaction. Online platforms provide customers with easy access to policy information, claim status updates, and support services, on the go, in their palm of their hand, streamlining and enhancing customer experience. FinTechs and InsurTechs have made significant inroads by designing powerful but focused applications that solve specific problems and deliver high-quality and intuitive digital user experiences.

Where does the customer fit in?

Technology has undeniably reshaped and disrupted the short-term insurance industry, from AI and machine learning to IoT and blockchain, these advancements have transformed how insurers assess risk, process claims, and engage with customers, while also addressing new risks and regulatory requirements. As the industry continues to evolve, insurers that embrace and integrate these technologies will be better positioned to meet the changing needs and expectations of their customers, address their evolving and increasingly connected risks, ensuring their continued relevance and success in an increasingly digital world.

For more information go to www.genric.co.za