In recent years, insurers and risk managers alike have increasingly focused on risktech—technology and tools to help prevent and mitigate risk. The following four trends in the risktech arena will influence risk management in the year to come:
1. Risktech will take over a larger share of the overall insurtech industry as investments in optimizing distribution channels, claims processing and underwriting activities start to plateau.
Over the past two decades, insurtech has grown dramatically. Adoption has recently accelerated with regard to applying new technologies with a focus on improving both capabilities and the customer experience in distribution, underwriting and claims servicing. While additional improvements can still be made, the markets around these applications have become crowded and the pace of new innovations is slowing. As such, risktech will gain traction, leading to greater focus on developing and distributing tools that benefit both the insurer and insured by reducing claims and, ideally, lowering premiums and deductibles.
2. Insurers will partner with or acquire risktech firms to add more protection services meant to mitigate risks.
Demand for risk mitigation devices and services is starting to surge. Buyers are more aware of the existence of protection services, and they want in. Insurers that have not already delved into the risktech market will need to create strategic partnerships or work to create the capabilities themselves.
For example, risktech pioneers set their sights on a perennial source of small but frequent claims that plague both personal and commercial lines: water damage. Many manufacturers, developers and integrators now provide sensor systems to detect water leaks as well as freezing temperatures that could lead to frozen and burst pipes. These technologies are especially useful for buildings that may be empty for a certain period of time, for example, with pandemic closures or operational reductions. Building owners or staff can be alerted to a leak or freezing temperatures right away, and can take steps to prevent or minimize damage and outages.
While less prevalent than water-related sensors, wearables represent another maturing area of risktech. These devices are especially popular for jobs that require repetitive lifting or stretching, typically found in manufacturing and warehousing, but also in some health care industries such as senior living communities. Employees can wear devices that alert them to improper lifting techniques or body posture, thus reducing their risk for on-the-job injuries and, in turn, workers compensation claims. Newer devices are smaller than their predecessors and innovators are finding ways to embed them directly into clothing to collect additional data and avoid the challenge of the wearer removing devices.
3. Advancements in computer vision and artificial intelligence will continue to spawn new risktech offerings.
Camera technology has advanced remarkably over the past decade. Not only do most people carry a camera in the form of a mobile phone, but devices that were built specifically to be a camera can do far more than simply capture images. Using these new capabilities, programmers are training computers to recognize potential threats.
The combination of computer vision and artificial intelligence will help organizations minimize risks at their facilities. For example, a number of firms have developed software that can “see” a weapon in someone’s hand, recognize it as a potential threat and alert security personnel. Similarly, computers could be trained to recognize items and activities that might indicate a threat of arson, such as carrying fuel cans and stacking combustible materials near a building. Alerting staff and security personnel to such activities could allow them to either prevent the crime or react to the fire quickly. In addition, combining security camera images around a facility with intelligence about any notable activity in the area can help businesses to take pre-emptive action to protect their patrons, personnel and property.
4. As costs decline and capabilities increase, more insurers will add internet of things (IoT) devices and associated services to their offerings.
With early iterations of risktech continuing to mature and yield more capabilities at a lower cost, the tangible benefits of deploying IoT devices are quickly becoming a standard to stay competitive. Add in the expansion of 5G coverage, and this will lead to a growing wave of risktech adoption by insurers that will ultimately inspire even greater innovation and refinement. While this is good news for insurers, the ultimate beneficiaries will be policyholders themselves.