AI integration propels insurtech sector despite funding slump
Scott Ham, CEO of Pinpoint Predictive, Inc., forecasts what insurance digitization will look like in five, 10 and 15 years.
Global insurtech funding receded for the second straight year in 2023 as changing business models, coverage lines, and adoption trends like AI and machine learning flooded the sector.
“Insurers’ investments are strategically directed toward key areas and current trends including embedded insurance, employee benefits and cyber risks,” the National Bureau of Economic Research (NBER) recently reported. “This strategic approach reflects a forward-thinking industry mindset.”
PropertyCasualty360.com recently spoke to Scott Ham, CEO of Pinpoint Predictive, Inc., about leading insurtech trends ranging from AI adoption and its impact on carriers and customers, to emerging cybersecurity threats and where the industry will be in the near future.
Ham is a veteran executive in the insurance, insurtech and startup space. Prior to his tenure at Pinpoint Predictive, he served as the president and CEO of Transamerica’s life, P&C and non-life business.
PropertyCasualty360: What is the leading trend in the insurtech industry right now?
Ham: The integration of AI and machine learning into various insurance processes. This includes predictive analytics for risk assessment, automated claims processing and AI powered chatbots for customer service.
Additionally, there is a growing emphasis on hyper-personalization, leveraging advanced data analytics to offer tailored insurance products and services that meet individual needs.
PropertyCasualty360: How will it impact insurance carriers and consumers?
Ham: The adoption of AI and machine learning will significantly impact both insurance carriers and consumers. For carriers, these technologies streamline operations, enhance risk management, and reduce operational costs.
Consumers will benefit from more personalized insurance offerings, quicker claims processing, and improved customer service experiences. As insurers better understand. Individual risk and behaviors, they can offer more competitive pricing and innovative products.
PropertyCasualty360: If insurtech is meant to streamline processes and cut costs, where can insurance carriers expect to offer these savings?
Ham: Insurance carriers can expect to offer savings through several avenues including operational efficiency, where automation and AI reduce the need for manual processing and lead to lower administrative costs.
Through enhanced risk assessment, where predictive analytics improve risk evaluation and lead to more accurate underwriting and reduced losses. Fraud detection, where AI and machine learning identify fraudulent claims more effectively and reduce payouts on false claims
And customer service, where AI powered chatbots and self-service portals decrease the need for extensive customer support staff.
PropertyCasualty360: How do emerging cybersecurity threats impact the ongoing digitization of insurance?
Ham: As the insurance industry continues to automate, emerging cybersecurity threats pose significant challenges. Automation increases the attack surface for cybercriminals, necessitating robust cybersecurity measures.
Insurers must invest in advanced security protocols, such as zero-trust security models and blockchain technology, to protect sensitive data and ensure trust in automated systems. Failure to address these threats could lead to significant financial and reputational damage.
PropertyCasualty360: Where will insurtech be in the near future?
Ham: In five years, the continued integration of AI and machine learning will further enhance predictive capabilities and customer personalization. Insurtech solutions will become more prevalent, with significant improvements in efficiency and customer engagement
In 10 years, the insurance landscape will likely see a shift towards fully automated processes, including underwriting, claims processing and customer interactions. Technologies like blockchain and IoT will be more widely adopted, providing enhanced security and real-time data analytics.
In 15 years, the industry will have undergone a significant transformation, with AI-driven ecosystems managing most insurance functions. The role of traditional insurers may evolve to focus more on risk prevention and management of partnerships with customers. New insurance products and models will emerge to address the evolving risk landscape driven by technological advancements and changing customer behaviors.
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