The insurance industry is undergoing a digital transformation hastened, in part, by the pandemic. These technological advancements benefit both insurers and their insureds — whether through encouraging a healthier lifestyle or by providing a seamless onboarding experience.
Internet of Things (IoT)
Advances in insurance technology enable insurers to reduce fraudulent payouts, lower operational costs while automating mission-critical processes such as underwriting and acquiring new policyholders.
There’s an explosion of solutions that collect and transmit live data.
Wearables such as smartwatches and smart home appliances have played an important role in increasing the amount of actionable data that are produced on a daily basis.
This is why IoT is being implemented by many insurance companies. IoT describes the entire network of physical tools, appliances, and gadgets that contain built-in software which automates the exchange of data with other devices over the internet.
Internet of Things gives insurance providers the ability to better understand their audience which will help them offer innovative insurance products and personalized pricing.
Machine learning is an exciting branch of artificial intelligence. It relies on complex algorithms to study datasets without human input. After some time the algorithms can make decisions by themselves, which is one of the major selling points of machine learning.
The Black Box Problem
ML solutions are vulnerable to the black box problem, which is a serious concern for insurers. In short, over time it becomes impossible for humans to understand the decision-making of the algorithms and how certain conclusions were reached.
For insurance carriers and other businesses for that matter, this is a very serious drawback because organizations need to have a clear view of their processes.
Innovating with IoT and Rules Engines
Insurers need a way to process the vast quantities of information that they receive from IoT devices. In other words, they need a software solution that can create and manage new rules. They need a rules engine.
Some of the ways that insurers can improve their relationship with policyholders using rules engines include alerting policyholders about the following circumstances:
- The room temperature in the house exceeds normal parameters and the fire alarm isn’t activated
- A person’s heart rate jumps too high in a short span of time and isn’t the result of physical activity
- Policyholders put on too much weight which isn’t a result of exercising or lifting weights (assuming insurance carriers have enough data to know whether the person is exercising)
Insurers can use the real-time data they get from IoT devices to partner up with policyholders and recommend healthy and safer behavior. This improves the lives of policyholders and saves the insurance company’s money.
The Relevance of Rules Engine
Insurance companies are often obliged to immediately and accurately update their products so that they can get to market with new offers. Traditionally, these actions required an experienced programmer, however, nowadays a rules engine enables insurance companies to make these changes in mere minutes!
Some of the advantages of rules engines are:
- Drastically faster time to market
- Staff from different departments can get involved in product development
- Empowering non-technical experts to create insurance products
Non-technical employees with basic training can immediately create and manage insurance plans. Rules engines were designed to give businesses an edge over their competitors.