Reform of Insurance System by InsurTech (1/2)

This article is written by Mr.Koichiro Ohira, Senior Fellow, Institute for International Socio-Economic Studies（NEC Group）

Yet to be recognized widely
In our daily life the insurance covers the risk in case anything goes wrong. In this field of insurance the latest advanced ICT technology such as AI (Artificial Intelligence) , IoT(Internet of Things) and mobile is already well utilized.
While “FinTech” (combination of Finance and ICT Technology) is used for financial settlement, loan, assets management, the combination of Insurance and ICT Technology is lately called as “InsurTech”.

In Japan this “InsurTech” has not been yet recognized widely, but, in overseas countries there are exhibitions actually organized specific for “InsurTech” and there are many insurance companies and start-ups who are actively pursue the possible applications of this “InsurTech”.

AI just introduced
AI (Artificial Intelligence) is one of the latest technologies attracting most attention, and, AI starts to be introduced in the insurance industry in such case as call centers and damage investigation.

For example, Sompo Japan Nipponkoa Insurance is starting to utilize this AI technology in their call centers as “Automatic Assistant System to indicate suitable replies to telephone operator or adviser” by AI indicating candidates for most suitable answers for client’s enquiry which is documented through voice recognition technique.

In overseas countries Manulife of Canada and GEICO of USA are developing the system with voice recognition technique.

Tractable of USA have developed artificial intelligence photo estimating system to identify individual exterior auto parts from photos taken by smart-phone and classify each part’s damage as repairable, replace-only or unscathed and to project estimated repair cost and expenses referring to the data base and AI’s knowledge of several million actual examples of images and photos of damaged cars.

In order to best utilize the capability of AI it is absolutely necessary that data and information in the corporate activities are fully digitalized. They actually are targeting “paperless” processing system so that sales agencies and brokers, are entering applications and contracts into the computer system through tablet-computer terminals on the spot.
The image work flow is also utilized to scan and digitalize a large amount of data and information on the conventional paper documents stored in the past.

In the sale of insurance policy on-line sales are getting popular lately through internet, and more and more smart-phone are used.
In UK internet sites called “Aggregator” to compare different insurances are also getting popular and are widely used specifically for the car insurances.

Niche Demand
There appears social brokers who negotiate and arrange insurance contract as an agent with insurance company for niche insurance demand not listed nor popular in normal insurance arrangements through internet or SNS (Social Networking Service).
Bought by Many is one of such brokers in UK who organize and arrange groups with diversified niche demand for insurance, e.g. for pet, for beauty treatment, for carpenters and so on. They actually gathered more than 500 thousand members. 

As explained above InsurTech is contributing to improve efficiency of business process and to reform sales channels. 

In the next issue I would like to cover the topics of utilization of IoT of high level of attention and business models newly created by InsurTech.