2020-02-05 By Tanya G. Dixon
The Motor Vehicle Insurance Company versus Industry 4.0: Reasons Why Insurance Companies Should Embrace the Future
“From income inequality to climate change, technology will play a critical role in finding solutions to many of the challenges our world faces today. This year’s emerging technologies demonstrate the rapid pace of human innovation and offer a glimpse into what a sustainable, inclusive future will look like.” – Jeremy Jurgens, Chief Technology Officer, World Economic Forum
Industry 4.0 is also known as The Fourth Industrial Revolution or 4IR. And, it is defined as a time of incredible technological advances and a “fusion of technologies” that, according to Klaus Schwarb, the founder and Executive Chairman of the World Economic Forum, will blur the boundaries between the digital, biological, and physical worlds.
Consequently, the questions that must be asked and answered are:
- How will Industry 4.0 affect the motor vehicle insurance industry?
- And, why should car insurance companies embrace these forward-looking technologies?
Here are several points to consider as a possible answer to these questions.
Increase business process efficiencies
An insurance company, irrespective of whether it offers motor vehicle, health, or life insurance, is an organization that is answerable to its shareholders, and its primary function is to generate a profitable income. Otherwise, there is no point in being in business.
One of the fundamental ways to turn a profit is to improve on business process efficiencies by automating business processes, increasing electronic access to the insurance claim’s life cycle, and keeping the necessary documents in the cloud rather than carrying reams of paper around.
Submit claims online
As highlighted above, moving the entire claims submission process from a paper-based system to an online system is an excellent way to streamline business processes. Secondly, it is vital to allow insurance attorneys like an Allstate insurance attorney in Los Angeles to submit the claim plus supporting documentation online.
This will reduce the time taken to process the claim. And, because it removes a lot of the “human-error” component, the pay-out value of the claim will be calculated more accurately. Thus, saving the company time and money.
Derive accurate statistics
One of the technologies influenced by Industry 4.0 developments in the Artificial Intelligence and machine learning sector. Additionally, computer hardware and software systems have the potential to process large volumes of data collected from sources across the total claims processing lifecycle.
This data is processed by machine learning algorithms and produces more accurate statistics that, in turn, can be used to calculate the client’s risk profiles and monthly premiums. This whole process is designed to charge clients lower premiums while taking their individual risk profiles into account.
Reduce the potential for fraudulent claims
Fraudulent claims are one of the primary drivers for an overall premium increase. Ergo, the more claims the company pays out, the less profit it will make, and the more the monthly insurance premiums will have to increase in price.
Therefore, it is vital to use the latest Artificial Intelligence and machine learning models that will quickly learn the typical patterns of a fraudulent claim. Consequently, it will either prevent the claim from being processed or alert management that there is an attempt to submit a fraudulent claim.