Technological innovations in the insurance value chain

Technological innovations play a key role in all areas of insurance business, profoundly changing the business models of insurers with an impact on all activities, both internal (actuarial, underwriting, etc.) and external (distribution, etc.).

innovationThe activities that make up the insurance value chain as well as technological innovations can be visualized from the table below, with the tools used applying to new forms of communication, information sharing and customer relations.

Value chain activitiesToolsImpact on insurance value chain
- Big Data
- IoT *
- Blockchain
- Better behavioural, granular data collection and service personalisation,
- Product/service innovation,
- Product/service diversification,
- Telematics may reduce associated risks but they may create new ones, such as cyber risks.
- Big Data
- Artificial intelligence
- IoT
- Blockchain
- Cloud computing
- More predictive and evaluative analytics,
- Reduction of information asymmetries,
- Finer risk assessment,
- Improved risk prevention,
- Finer segmentation driven by greater processing capabilities,
- More risk appropriate pricing,
- Contract information stored digitally.
Sales and distribution
- Big Data
- Cloud computing
- Chatbot
- Artificial intelligence
- Social networks
- Mobile devices
- Websites and apps
- Better circulation of information to the market,
- Contract information stored digitally,
- Increase in the number of policies purchasable online,
- Increased involvement of the customer in the sales process,
- Innovation and diversification of sales channels,
- The recent entry of InsurTech start-ups into the insurance market from adjacent markets,
- Less face-to-face engagement.
Policies and claims management
- Big Data
- Artificial intelligence
- Blockchain
- More accurate claims assessment,
- Fraud reduction,
- Automated calculation and pay-out of claims,
- Possibility to claim damages and follow the procedures digitally,
- Decrease of processing time.

* Internet of Things
Source: The International Association for the Study of Insurance Economics

Many innovative technologies can be used throughout the value chain. Likewise Artificial Intelligence (AI), the use of technology allows both the enhancement of the software system dedicated to the background infrastructure and user interfaces.

Big Data, AI, Predictive Modeling, Telematics and the Internet of Things impact all along the insurance value chain.

These technologies interact from product development through pricing, underwriting and distribution. The same process applies to policy management, claims, risk and asset management.

According to a survey conducted by Accenture, 74% of clients are willing to follow the advice provided by artificial intelligence solutions. In order to approach them, some insurers have set up chatbots operating 24 hours a day and able to understand, properly respond and process policyholders’ requests.

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