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Rise of Financial Technology in Auto Insurance

Rise of Financial Technology in Auto Insurance
Image source : economictimes

Several characteristics of this industry lend itself to using the latest technological developments. There are millions of occurrences which are easily predictable, calculable and therefore programmable. Automating functions like claim handling will save billions of dollars over the years for the companies.   

That is why large companies with deep pockets invest heavily on finding new solutions to deal with mundane problems more cost efficiently and faster. Their initial goals are to reduce costs and increase revenue. For example, they analyze customer shopping patterns to figure out how far they can push the rates up before the customer has enough and start looking around for cheaper car insurance quotes from alternative providers. 

What Is Fintech?

It is basically using new technology to deal with the usual transactions financial companies are facing every day. This could be collecting information using big data, making sense of it and applying it to predict customer behaviors to increase sales and keep customers. Artificial intelligence, cloud computing and blockchain are some of the technologies that are either used or in consideration at the moment.

How Does Fintech Help Vehicle Insurers?

Companies are bogged down with repetitive work that can easily be done by computers. For example, one of the simplest forms of technology used in customer service is the chatbots. The questions policyholders can ask are already predicted and cataloged. All the bot needs to do is to read it and find the most suitable answer available in its library. Considering the computing speed we have today, it isn’t a difficult task and done pretty fast and well by bots.

Actually, there are several companies that use past information to program computers so that they can measure vehicle damages based on what they learned from past data. Once the pictures of the damaged automobiles are uploaded with the claims, computers can compare them with millions of similar pictures in their system and come up with estimates. The best part of it is that they can only get better in completing these tasks with machine learning.  

Car insurance companies trust these solutions so much that they allow them to finish the whole claim process from start to the end and let them send the payments. In theory, even if they aren’t perfect, they already save millions of human working hours. It isn’t a big deal if they are a bit generous, although it is unlikely since they are programmed by people employed by insurers.

The good thing is that the industry is open to new ideas. About ¾ of the CEOs confirm that they are looking into new technological solutions. Some are already in use and the carriers are open about them. Surely, there are a few other applications working in the background, analyzing consumer behaviors and trying to predict how motorists would react to premium increases, low-balled claim settlements and robots answering their questions.

These cost saving solutions will have serious implications for motorists. If the companies cannot find a way, the only other option left is to increase automobile insurance rates. So, we would be rooting for them to succeed for sure. 

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