Most people put little thought into how much insurance matters, asides from knowing whether it will protect their car, or provide cover in the case of cataclysmic damage to their home. But the truth is, the insurance market is a multi-billion-dollar industry that sits unseen as the Nation’s economic backbone. It quietly supports our country by providing millions of jobs, protecting against potential disasters, and investing in our Nation’s future. It has existed for centuries and it will continue to exist for several more.
It doesn’t matter whether we like or hate the insurance industry, it will remain an indestructible powerhouse that will always be required. However, the world is evolving, and insurance is changing right along with it. For the first time in hundreds of years, the near-daily innovations in technology will have a direct impact on how the insurance industry operates. Advancements in technology are constantly changing the way we move through Life; from the way it governs our homes, vehicles, computers, and even our money to the way that it is changing energy production, predicting disasters, and revealing new secrets.
At the same time, new dangers are continuing to emerge that are permanently altering the ways that risk is assessed, evident in the growing dangers of increased seismic activity, along with increased chances of catastrophic storms like Katrina and Harvey, mounting water concerns, and the horrifying risk of bioterrorism. These threats are just a fraction of those that have made it imperative that technology continues to provide solutions for tomorrow’s problems. However, the continued progression of technology and the increased probability of risk has simultaneously resulted in a shift in the methods of operations for the insurance industry.
JDi Data is an IT company that produces software solutions focused on improving day-to-day tasks for all facets of the insurance industry, ranging from legal all the way to adjusting. In order to stay ahead of the competition and to continue offering game-changing solutions, JDi must be prepared for the ways that insurance is evolving. This has made it necessary for businesses to begin using technology as an access point for better understanding their customers’ so that they can effectively deliver them all of their needs and wants, while also understanding their chances of risk and the likelihood of exposure to a calamitous event.
Transportation & Household
The vehicles that we use for transportation are the most obvious example of how technology is revolutionizing the ways that companies gather data. Since 1968, computer systems have been silently improving the ways that vehicles operate, starting with a need for a more accurate fuel delivery system in a vehicle’s engine. Since then, computers have continued to be implemented into the multiple components of our cars and trucks; producing safer, smarter vehicles. The idea of smart cars is no longer an idea only seen on The Jetsons. Instead, it’s a reality firmly seen on the quickly approaching horizon.
Already, a majority of the vehicles on the road possess advanced features like blind spot assistance, adaptive cruise control, and advanced system sensors to safely monitor the quality of a vehicle’s oil, brakes, and tires. Fortunately, these features have already made a beneficial impact on the quality of highway safety by helping prevent high-speed collisions with unseen vehicles, tire blowouts, and engine failure. They’ve also been able to gather critical information on the time and location, as well as the speed and point of impact for vehicle collisions. This data has helped insurance companies identify previously unknown risk factors.
Still, vehicles continue to evolve. The autonomous vehicle revolution is currently spearheaded by Tesla and Google, but other companies like Toyota and Volvo are also testing their own systems. These technological advancements will result in an estimated decline in vehicle insurance premiums by up to 25 percent over the next 20 years- a dramatic decrease that could significantly impact the overall revenue of the insurance industry.
However, vehicle premiums are not the only line of insurance already being affected by technological advancements; homes are becoming more advanced with stronger, more efficient designs, better security systems, and intelligent appliances. Household innovations (such as Amazon’s Alexa) have already begun to add automated features, like enabling occupants the ability to unlock doors and welcome guests from a remote room. Technology has alleviated the risk of insuring older homes with the development of scanners that have the ability to identify structural defects that would have otherwise been missed by human inspectors, like unseen water damage.
But, in order for technology to work efficiently, it needs the ability to communicate with other devices through a personal or local (Bluetooth or WIFI) connection. The constant need for mobility has caused wireless to become the new standard for how devices connect and, out of this standard, the ‘cloud’ was born. Developed to help facilitate the wireless transmission of data, cloud technology has had a huge impact on how information is shared by eliminating the need for separate hard drives and servers and enabling the remote storage and access of information.
In recent years, the cloud has had a huge effect on how technology synchronizes and has even begun to reshape the way that the insurance industry operates, specifically in the core processes involved for underwriting and handling claims. Intuitive software systems have already revolutionized the way that insurance is created and handled by nearly eliminating all of the superfluous tasks that were hampering processes. This has made it possible for insurance companies to quickly process and handle claims at a rate previously unseen in the industry, saving countless lives by enabling faster relief efforts to disastrous events.
Of course, for all of the amazing benefits technology has added to our lives, there also comes the unwelcome addition of new forms of risk. While the cloud has revolutionized the interconnection of all our devices and enabled the ability to gather data on our daily habits and needs, it has also placed a huge target on its back for cyber attacks. The mass accumulation of data into large virtual locations has made many cloud services susceptible to potential theft and terrorism.
Large organizations like the Sony Entertainment network have already experienced system hacks that exposed all (close to a 100,000) of their customers’ private information. The cost of the attack was estimated to have caused nearly 100 million U.S. dollars in damages that included downtime, the need to replace/restore their system, and resulting lawsuits. Although, the cost of the attack on Sony itself was covered by insurance, meaning the blow to the company’s reputation was the biggest loss that they suffered. To help alleviate the negativity surrounding Sony, they offered all of their exposed customers a free year of data protection services and the pleasant distraction of free video games.
Even though the accompanying side effect of technological advancements can be seen in the (relatively) new form of cyberterrorism, this does not place the blame on technology for the damages caused. There are those who will constantly look for the opportunity to take advantage, steal, and terrorize. The Sony hack was one of the largest of its kind and it demonstrated how weak Sony’s security system was. But this does not mean that we should halt progress in fear of how it could be manipulated. Since then, Sony has completely rebooted their security systems to proficiently guard against future attacks.
The advantage is in favor of preventing digital attacks versus assisting them; if we continue to look for new ways that technology can help us, we will continue to make new revelations on how to increase our security and guarantee the safety of our information.
Aside from technology making it possible to finely gather remote details and optimize communications, it is also reforming the future of currency. Since 2008, the digital currency has been gaining momentum through an innovation known as block chaining. Originally, it was introduced in the form of Bitcoins- which took the world by storm as a new type of credit that holds monetary value and is completely safe from being stolen. It operates based on a relatively simple concept that is set to revolutionize the way that the insurance industry runs through the idea of trust.
Traditional money functions on the basic idea of reliability. That is, an individual relies on (trusts) the fact that the 20-dollar paper bill in their hand has the purchasing power to obtain goods and groceries. We trust that it is being produced and distributed in a controlled manner and that it will continue to retain its value throughout time.
Block chaining works in a similar manner by utilizing an incorruptible digital record book of all economic transactions to have occurred for digital currency. This way a chain of trust is established as the currency can be compared to the goods that it has been used to purchase, while the risk is spread out among all of the users. This method of tracking value is so honest that banks in third-world countries are already starting to embrace block chaining as a way of stimulating their economy and currency values. But that’s only a tiny aspect in the multitude of ways that block chaining can reshape money.
The technology behind digital currency is set to completely reform the way that we pay for things and how businesses operate. Recently, Swiss Re, the world’s second-largest reinsurer, conducted a controlled research experiment to better understand what the potential effects of block chaining might be. The results were incredible. They found that the conversion to an all-digital form of currency could result in potential costs and time-savings of 30 percent. This is because current financial systems have to manually document and track currency at every step in order to verify its value. A process that results in multiple contracts and numerous ledgers, which significantly slows down the transfer of currency and greatly increases the chance of error.
In the future, the efficiencies of block chaining may translate to overall lower costs and faster service for not just the insurance industry, but for everyone. Its ability to completely eliminate the administrative process involved in tracking value has opened new doors for the ways that people can pay. For example, as autonomous cars continue to become more and more capable of driving by themselves, we will eventually be able to send and request them as we need. This means we could send our vehicle to go get its oil change without having to physically be there. And with the addition of digital currency, the car could theoretically pay the mechanic for their labor, which would then be outlined in the ledger.
The potential advantages that digital currency creates are endless. It has the power to streamline monetary transfers, eliminate theft, and automate trivial tasks. One consultancy group, Capgemini, even estimates that it can cut global claims settlement costs by $21 billion. Meaning that the insurance industry would have that much more money to invest not just in our economy or nation, but in the world. This could lead to a potential future that is infinitely separate from the past goals of the baby boomer generation, one that could possibly mean better schools, cheaper renewable energy, and a cleaner environment.
As more and more baby boomers retire, millennials increasingly get set to take the reigns as the next industry leaders. A change that will inevitably result in a complete shift in cultural values. The effect of which, will have another huge impact on the insurance industry. Luckily, this shift has already started taking place as the driving force behind the newly advanced data collection methods that are responsible for the new ways that insurance is able to assess information. In fact, recent trends in the workplace are even beginning to reward employees for good health who consent to be monitored.
The advent of the Fitbit (and other similar fitness tracking items) made it stylish to “rock” a fitness monitor in public for the first time, making people even more obsessive about their health stats. Health insurance companies were keen to pick up this cue as a chance to receive even more intimate data on their customers. The result of which created new group health programs that are designed to offer employees complimentary fitness bracelets that monitor their health in return for insurance breaks and rewards for being extra healthy. This has led to increased employee retention rates, higher productivity, and huge savings on company insurance costs.
Segueing to other shifts in the culture, the current replacement of several outdated laws by their much more progressive counterparts stand as a prime demonstration of how the nation’s general attitude is changing. One such example can be seen in the increasing legalization of Marijuana and cannabis-related products. The only unfortunate outcome of which is the new liabilities the insurance world is now facing.
In the states that have already legalized Marijuana, data is beginning to surface that there has been an increase in reports of vehicle traffic collisions. Some of these accidents have been attributed to the decreased fear of legal retribution for possession and driving under the influence of marijuana, which has led to more people admitting to marijuana use. But, thus far, all tests and experiments have returned inconclusive results that have made it impossible to discover any direct correlations. Still, it is possible that insurance companies may take the existing statistics as a forewarning of increased risks associated with the legalization of marijuana and try to offset costs by raising rates.
Conversely, the economic boom of the marijuana industry has led to a new stream of revenues that equaled $1 billion in Colorado alone. Although most of the large insurance companies have shied away from entering the business, (due to federal regulations) new companies are beginning to form that seeks to take advantage of the new market opportunities. Already, underwriting has been established that has enabled companies to insure grower’s crops, indoor cultivation equipment, retailers, and evencannabis-basedd laboratories. Plus, the industry’s projected 700 percent growth over the next five years, further solidifies marijuana’s status as a new economic lifeline for the U.S.
Adapting to the Future
There can be no doubt that as technology has continued to progress, so too have our country’s attitudes, morals, and way of life. The result: a harmonious symphony of culture and technology compounding to produce a sum greater than the individual parts. One that has been mutually beneficial; equally allowing the other to flourish through the natural symbiosis of human advancement and necessity. The result, of which, is a shift in the traditional methods and manners that not only govern our daily lives, but also affect the way that we choose to operate and run our businesses.
The outcome of technology and culture progressing in parallel will assuredly extend past everyone and everything. However, the insurance industry alone will experience the most notable shift in operations and development as one of the largest sources for employment and revenue generation within the world. This has made it imperative that those in the industry (like us at JDi Data) continue to stay abreast of the latest technological developments, so that we can continue to guarantee the best available solutions.
Luckily, JDi Data operates in both the technological sector and the insurance world, which has effectively enabled us to take tomorrow’s advancements and apply them in an innovative manner that continues to efficiently optimize the way that insurance conducts business. The fruits of our labor can be seen through the extensive list of features available in our current product roster. These include our groundbreaking automation capabilities, which have completely changed the way the insurance industry accomplishes their daily tasks in the same manner the rear view cameras revolutionized how you back up your car.
But in order to establish JDi Data as the standard solution for the insurance industry, we must continue to forge ahead so that we can find next avant-garde technology advancement that will forever advance the way we operate. To do so, we must keep our ear to the ground and our eyes on the prize; as the world continues to progress, the traditional methods for doing things begin to fade away from memory and die out in a bed of weeds. As history has repeatedly shown us, only the best and most informed will remain steadfast and continue to survive, making it critical that we are constantly looking for innovation.