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Pitfalls In Developing Insurance Software

Humanity is experiencing a rapid digitalization of many areas, and insurance is no exception. What will be protected in the digital world and how?

It is clear that the insurance industry is changing. It incorporates the latest technology. And it adapts to today’s challenges. At the intersection of technology and traditional insurance, a completely new field is born – insuretech. It’s actively used in insurance software development company.

Pitfalls In Developing Insurance Software

Insuretech: new technologies in insurance

Insuretech is a young technology industry focused on developing IT solutions for the insurance industry. These can be both services for consumers. And these can be tools for the work of insurance specialists themselves.

IBM found that 81% of the most successful insurance companies have already invested in or are collaborating with insurtech projects. Among the rest of the study participants, this figure reaches only 45%. This suggests that technology is vital for insurers to thrive.

To compete in the market, they must either invest in their own developments or use ready-made solutions from IT companies. Another way is to support startups developing the right technology.

P2P and microinsurance

The most famous example of peer-to-peer insurance is the Israeli-American Lemonade. It was founded by former SanDisk executive Daniel Schreiber and Fiverr co-founder Shai Wininger. The service works on a subscription basis. There insurance payments are formed from the contributions of the users themselves.

Lemonade uses AI and machine learning. Thanks to this, the operations are quick. The website states that it will take a user 90 seconds to get insurance, and 3 minutes to get paid. Investors believed in the technology: the total investment reaches $ 180 million.

People are accustomed to insuring only expensive purchases: real estate, cars, art objects. However, modern technologies allow you to protect documents, keys, small gadgets. This area is only developing, but in a few years such protection will become commonplace.

Blockchain in the insurance industry

Not only insurance, but the financial services industry as a whole is experiencing a crisis of confidence. Edelman’s research shows that mobile, telecommunications and blockchain technology from Fireart can be the solution.

The main points of application of efforts are the protection of customer data. It’s the development of more transparent and affordable insurance solutions.

Blockchain is trending now, and many startups are trying to apply it with or without reason. However, insurance is exactly the area where blockchain is definitely needed. Another question is that it is not easy to implement. It’s not just about technological complexities. It is almost impossible to enter this market “from the street”.

We need to look for common ground with big players. Most established insurance companies are not interested in changing something, but there are those who are open to new solutions. I will not name names, but among my clients there is a company that is working on an insuretech solution on the blockchain.

In the 2018 Edelman Trust Barometer global report, analysts cite 2017 as the year of a crisis of confidence and 2018 as the year of the battle for truth. Insuretech is likely to be an effective weapon in this battle.

IoT and insurance

The development of the Internet of Things is associated with the growth of cyber threats. Modern “smart” technology often has a weak security system, and users are not too worried about the strength of passwords.

On the other hand, IoT technologies are developing the insurance industry, reducing risks. So, smoke detectors in an apartment allow you to notice a fire in time and extinguish the fire until it brings large losses, and insurance payments will be lower.

This is beneficial for insurance companies. They can lower service costs for customers who have smoke, flood and motion detectors installed.

If we talk about auto insurance, the company will be able to track the speed of the car and other parameters of behavior, as True Motion does. For cautious drivers, premiums will be lower. So IoT technologies will be useful in the development of usage-based insurance – insurance based on use.

insurance software development

Use-based insurance

The insurance industry has a poor reputation. It is difficult for people to understand exactly how these services work. Customers do not understand how profits are generated, and many fear that the company is charging an unfairly high fee. Young companies are trying to compete with traditional “sharks”, including through more transparent pricing.

For example, the aforementioned Lemonade keeps only 20% of the funds received from clients. Not only users, but also businesses benefit from risk reduction.

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