Using modern technology to reduce underwriting risk

Today’s world is rushing towards innovation, digitization, and cutting-edge solutions. This can be seen pretty much everywhere, from complex systems used for national security to those that help us do our groceries or perform simple housework. One could think that only the insurance market hasn’t moved forward for over a decade now. Or has it?

We can read about interesting solutions for new methods of buying insurance or novel insurance systems themselves increasingly more often. Moreover, new entities are starting to appear on the insurance market. They use innovative methods that reduce the cost base required to cover risk in insurance. The ability to accurately determine individual risk per client lets them offer customers tailored prices, independent of the risk for an entire portfolio, which are often lower than those found elsewhere on the market.

One such solution which has recently grown in popularity is driving-style monitoring. So far, the automobile insurance industry has classified vehicles in terms of territory, type of vehicle, declared future mileage, driver profile, and information about the driver’s past insurances. Today, however, a proposed innovative solution in the form of User-Based Insurance (UBI). This an insurance system in which the customer pays a premium based on their driving skills and vehicle parameters. A system categorizes and assesses a driver’s behavior on the road and monitors their vehicles operations. This data is then used by insurance companies to adjust the sum insured, premiums, and the driver’s insurance protection. Ultimately, the insurer charges a fee that is related to how well and how often a client drives.

The first company to introduce this solution on the American market (and patent it) was The Progressive Corporation in 1998. Today, this product is available in two versions: as a vehicle “plug-in” and or as a mobile application. Both rely on monitoring a clients’ driving style. The plug-in device works by being connected to an interface in a computer or a smartphone, where you can find an entire analysis and valuation of insurance premium rates together with their justification. Based on this monitoring data, it can be determined whether the premium for a previous time period was appropriate. When the insurance protection period is over, a driver receives a notification informing them about the need for additional payment or that they’ve been given a discount based on their previously paid premium.

This solution is based on telematics, something that is slowly emerging in Poland. In the case of insurance, it can be used as one of the tools to assess risk and evaluate and control it at later stages. With the ability to monitor their clients, an insurer is able to lower the rate of third-party liability insurance and thus move away from using only statistics in determining rates for very broad client groups. For example, statistics may show that young drivers are the cause of road accidents 30% more often than older people, therefore the rate of third-party liability insurance is higher for every driver under 26 years of age. Meanwhile, the individualization of the risk assessment system makes it possible to avoid generalizations and create accurate, personalized calculations for young, good drivers. Moreover, a client that lets their vehicle use be analyzing is usually predictable, and therefore is a client with whom it may be easier to assess risk.

Another area of insurance which monitors client behavior is life insurance. Shops offer a whole variety of applications that help us improve our standard of living, maintain proper activity and productivity, or monitor our vital signs. Generally, they try to convince us that they are ideal personal assistants for every area of ​​our lives. What is a training app which shows your progress, current heart rate, calories burned, and also what route you took during your run if not a perfect database and a tool for insurance companies that provides them with information on a client’s state of health? All apps that store information on our health, expenses, location and activity are able to provide data that is required to determine the sum and period of insurance.

Insurance companies are not idle. We can presently download applications that are sort of like hybrids between apps we currently use to monitor our daily activities and a platform where we can buy different types of insurances adapted to our individual needs and possibilities.

One such example is InsureApp. AI used in the app generates a particular user’s behavior pattern , studies their habits, and uses this to adjust insurance offers to their needs. The system uses data collected by smartphone sensors, Internet of Things devices or services to illustrate human behavior. Based on this data, the application interacts with the user and encourages them to cross and up-sell and change their behavior to be more safe. The app uses all kinds of notifications to interact with its users; mobile and web-based, including e-mails and on-screen notifications. The app analyzes a user’s behavior and reactions to various factors and provides them with a personalized insurance offer with adjusted prices and premiums.

Clients nowadays are used to constant online activity, sharing details of their lifestyle on social media or using applications while doing sports. There’s added value in these hybrid applications: by doing what they would normally do anyway, users receive a product that is tailored to their needs and daily activities without having to complete online surveys or medical declarations. Thanks to this, they can make more informed purchases of insurance and derive greater satisfaction and benefits from their product.

Innovations are also present in other types of insurance, including the protection of mobile devices. So far, the scheme for this was pretty simple: only a newly-purchased device could be insured because being brand new gave the insurer certainty that the device was working properly. But what if you could insure a used phone? The pool of potential customers willing to cover their phones with protection would increase drastically.

There’s only one solution: retrieving information about a phone’s actual state at the very same moment an insurer is providing a potential client with protection services. This information should include the condition of a device’s screen, as this is a part that is most often damaged (display damage constitutes about 80% of all smartphone damage). The most reliable method of checking this is by performing a scan and letting an algorithm do the diagnosis and issue a decision on the possibility of protecting a screen. That’s a job for Scanbox – the very first device of its kind, created and patented by Digital Care Lab. All a user needs to do is place their smartphone inside and follow the instructions displayed on Scanbox’s panel. The whole process takes place in real time and doesn’t require sending photos in order to receive an expert opinions as this is performed by an advanced algorithm. Thanks to Scanbox, anyone can insure their phone, regardless of whether they’ve just bought it or have already been using it for some time.

Screen condition diagnoses performed this way lead to a whole new range of possibilities. First of all, they allow for the direct sale of insurance and protection services. Additionally, Scanbox is a mobile device. It can be placed virtually anywhere, which means that sales opportunities expand to new points of contact with customers. Scanboxes can be placed at service providers’ sales offices, but also at shopping centers or in electronic stores.

Mirrorcheck is another solution that helps cover smartphone screen protection. Mirrorcheck was also designed by DC Lab and lets user’s diagnose the state of a device’s display themselves, without having to leave the house. Its premise is similar to that of Scanbox: it also relies on a screen diagnosis performed by an algorithm which is based on a scan or a photo of said screen. However, the steps involved in this process are entirely different. To effectively use the application, all a user needs is a mirror and good lighting. The app guides the user through each stage of the screen test, starting with screen preparation through taking a picture in a mirror and ending with an interpretation of results and the activation of protection services. If a test ends with a positive result, then a user is redirected to a panel where they can purchase screen protection services. This solution is surprisingly simple and helps dispel any notions that buying insurance is complicated, boring, and tedious. The client doesn’t have to leave the house or do long-lasting expertise. Everything is done by phone, no third party is involved.

Remote screen diagnosis solutions are a response to today’s reality of the mobile device insurance market. Confirming that a given screen can be covered with protection lets customers insure used phones while drastically decreasing the risk of fraud and letting clients purchase yet another form of insurance fairly easily and without having to leave the house.