The revolution of machine learning insurance underwriting products

The insurance industry has historically been resistant to change. Underwriting is one of the most resource-intensive and time-consuming verticals, heavily dependent on analytics and data. But the digital revolution is here to disrupt the insurance industry (just like it has for everyone else).

As insurtechs employ state-of-art technologies like artificial intelligence, machine learning, and big data, insurers and underwriters can process massive amounts of data, detect patterns, and predict future events—leading to a better understanding of risk than ever before.

Today, let's explore the revolution of machine learning insurance underwriting products.

Usage-Based Insurance

Usage-based insurance, also known as a pay-as-you-go type of insurance, does just as the name suggests—rather than paying a flat fee for your motor insurance, you pay every time you use it.  To properly insure this kind of risk, underwriters need some serious data.

That means going above and beyond the color of their car and how far they've driven. While some usage-based providers just have you snap a photo of your odometer, this really doesn't give you the information needed to ride the wave of the revolution of machine learning insurance underwriting products.

Thanks to the explosion of data from telematics, phones, and other connected devices, machine learning is critical to analyzing our endless data streams. What makes machine learning transformational is that it works on all data sets, able them all together in a way we don't have the cognitive bandwidth to do as humans.

With machine learning, Insurers can take consider external factors like weather, events, the curvature of the road, and the speed of the car. This data can be pulled from telematics, prior driver behaviour, and other data sources. Now, insurers can assess risk accurately without relying only on the applicant-provided information and generate more appropriate premiums. This is a win-win for both the customer and the insurance company, largely thanks to the revolution of machine learning insurance underwriting products.

Embedded Insurance

After the pandemic, the world has shifted to be increasingly more digital. The potential to sell and distribute your product or service online has increased tremendously. Embedded insurance enters into the revolution of machine learning insurance underwriting products online.

You can embed insurance products as a part of your consumer's digital journey on your app or website. Machine learning can help you here in a plethora of ways. For example, you can analyze session data and cross-link it to user demographics, device types, pages, and apps they visited during the said time frames.

Machine learning not only helps you understand your customers and the likelihood of them buying your embedded insurance but it also provides you with actionable data on which approach to pursue while offering them: channels (email, text, ads), messaging, product and pricing, and frequency of use.

Short-Term Insurance

The world can be a risky place, especially if it's somewhere you're not familiar with. The rise of short-term insurance products is the answer to this. Whether it be insuring your weekend trip or protecting your phone from accidental damages or theft, short-term insurance is a growing contingency of the insurance market and a significant contributor to the revolution of machine learning insurance underwriting products

Machine learning comes in handy here because of its ability to predict behaviour, and detect patterns even based on limited amounts of data. Machine learning can analyze a vast array of dependent and independent variables associated with risk in order to underwrite risk better. It trumps human cognitive abilities by a wide margin when it comes to processing data and determining influencing factors. This is the revolution of machine learning insurance underwriting products which enables a much more nuanced understanding of the associated risk.

Explore the revolution of machine learning insurance underwriting products

The revolution is here. Machine learning can help insurers offer products and gain insights that were once only possible in science fiction.

If you want to explore how machine learning products can change your underwriting, we're here to help.