Welcome to Part 3 of the Impact of AI series. To recap, Part 2 of this series looked at the impact of selling and distribution and Part 1 looked at the impact of underwriting and risk.
Part 3 of this series will focus on the impact of the product development phase of an insurance product. In my last article, I looked at how Insurtechs are taking advantage of the smartphone penetration to distribute insurance to consumers via AI powered chatbots. And even though one may not naturally think that smartphones and insurance go hand in hand, in today's world, they do. Many would argue that both are a necessity for the average Canadian, with the more prudent individuals tilting the scale in favour of the security that insurance can offer.
Reacting to a market share gap
However, there is a clear lack of parity between these two products: 77% of Canadians own a smartphone, while only 61% have some form of life insurance. UK based Certua is an Insurtech aiming to close the life insurance coverage gap by providing a spin on a traditional product. But before we get into the specifics, it's important to know what a traditional life insurance product is:
AI & The Death Benefit
Certua’s initial product, which is rumoured to be launching in Q3 2017, uses AI to provide an insured real-time, variable coverage. Certua’s AI algorithm monitors live financial data feeds (ex. bank account, mortgage balance, investment activity) to determine the financial position of the insured and automatically increases or decreases the death benefit (DB) amount to ensure that the customer is always adequately covered. Adjusting the DB amount has traditionally been a time consuming, arduous process for the consumer: increasing requires the insured to go through the underwriting process again, and decreasing can subject the insured to additional fees and charges.
However, while offering an increase and decrease in coverage to accommodate an insured’s ever-changing financial circumstance benefits the consumer, the potential ramifications and claims experience for Certua and other Insurtechs when foregoing re-underwriting could be severe.
Check out Cookhouse Lab's upcoming project:
Will this gap close?
Ultimately, Insurtechs like Certua are deploying AI and different forms of technology to solve the pain points in the life insurance industry and close the coverage gap, hopefully leading to life insurance one day becoming as ubiquitous as smartphones are today.
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