New technologies are actively coming to insurance companies, but so far they are almost not used by policyholders. How can end-to-end AI analytics, automation and modern ecosystems help them?
Innovation for сonservatives
There is a contradictory picture in the insurance market. On the one hand, many modern technologies are extremely useful for this area and can bring huge benefits to insurers, policyholders, as well as insurance brokers. On the other hand, these technologies are often introduced for a long time and difficult – largely due to the specifics and traditions. Insurance has always been a conservative industry, it happened historically and is largely due to the peculiarities of this industry.
Insurance companies themselves are gradually introducing new tools in their activities – primarily cloud technologies, Big Data and AI. Which is absolutely logical, because the insurance business is based on big data and analytics, on statistics and probabilities.
So, according to a study by Precedence Researh, the volume of the global market for AI technologies for insurance in 2025 amounted to $10.82 billion, and the market in the next decade will grow by an average of 32% per year and will reach $176 billion by 2035.
Technologies can significantly reduce the burden on underwriters, and AI is extremely useful not only for analyzing current data, but also for predicting unprofitability, for making personalized recommendations and, which is extremely important for this area, for recognizing possible fraud.
Many of these technologies significantly expand opportunities for small insurance companies, for which the staff of highly qualified underwriters is a significant financial burden.
At the same time, so far this mainly applies to more unified types of insurance such as: OSAGO, CASCO, VZR, streaming cargo, boxed products for property and liability. In complex types of insurance, risks and tariffs are still determined by people – underwriters. Now, technologies cannot compete with them largely due to lack of data, as well as due to the need to take into account many non-obvious nuances and parameters.
Almost all innovations relate to the internal activities of insurance companies. The interaction between insurers and policyholders is the old fashioned way, with phone calls and email exchanges.
Also, new technologies are hardly used by the policyholders themselves, who at the same time incur significant financial losses due to transaction costs, suboptimal terms of insurance contracts, unexpected risks, etc.
Problems of modern policyholders
Only large companies can maintain insurance departments. For small and medium-sized businesses, at best, one dedicated employee deals with these issues, and often, in the form of an additional burden, insurance is entrusted, for example, to a financial director or accountant.
At the same time, the amount of work and responsibility often does not correspond to such modest resources. There are hundreds of insurance companies on the market, the customer usually has tens to thousands of different insurance objects for which it is necessary to collect information, track rollovers and regular payments.
For example, to get the best quote, you will need to consolidate data, send applications to at least several insurance companies, receive and analyze answers, and then make an effective management decision.
Many other tasks are added to this. In particular, having received losses on the insurance portfolio, it is necessary to control that these losses are declared on time and properly, prepare documents and so on.
As a result, due to lack of resources, companies constantly make ineffective decisions, which leads to significant financial losses and lost profits, and in some cases to catastrophic consequences.
Several trends can change this situation.
1. Process automation and SaaS services
Despite the trends of the time, in most companies and corporations, insurance tasks are not digitized. This is actually the only area that has hardly been touched by universal digitalization.
Most often, employees use ordinary spreadsheets, documents are stored in scanned form on a computer, etc. This creates significant risks and obvious inefficiencies.
Interaction with insurance companies also often takes place in the old fashioned way, through messages in instant messengers and the exchange of documents by e-mail. However, this is an outdated format – like calling a taxi or booking a hotel room by phone in 2025.
Companies sometimes use internal accounting systems to automate processes, but in principle they are not able to store all the necessary information on various types of insurance, and also do not have access to external communication with the insurance market.
The development of our own software products is not available for small and medium-sized businesses, requiring substantial time and financial costs. Even for large companies and corporations, this is usually not justified, especially since it does not solve the key problem – the automation of interaction with insurance companies.
In this situation, SAAS services will be a logical solution – cloud platforms that work by subscription and allow businesses to buy, renew and manage policies online, and the insurer will automate underwriting and payments. Such platforms simplify the purchase of high-quality insurance products, registration of policies, accounting and settlement of losses. At the same time, they do not require capital costs for the creation and maintenance of software, server, etc.
This is relevant for both SMEs and large companies.
Of course, there are nuances here too – the key issue with such a model is the reliability of the service provider. Both in terms of cybersecurity and in terms of long-term prospects. After all, if the provider leaves the market, it is unlikely that it will be possible to transfer data automatically to another platform – most likely, a certain part of the work will have to be done again.
2. Internet of Things and telematics.
An obvious trend that is especially relevant for representatives of the real sector. We are talking about devices that are initially installed not for insurance, but for other purposes. Therefore, in motor vehicles, telematic systems help to better control the driver, warn about the exit from the lane, etc., reducing the risk of accidents. In real estate, smoke or temperature sensors reduce the risks of fire or accident, in the industry, IoT systems monitor the condition of equipment, etc.
But these same devices also optimize insurance costs – partly due to reduced real risks, and partly due to more data.
Having this data allows you to insure yourself on much more personalized terms. For example, the pay-as-you-drive (PAYD) models become relevant – payment for car insurance only for the period of its real use) and pay-how-you-drive (PHYD), when the price depends on the driving style. Other options for dynamic insurance are quite possible (with changes in the cost of policies depending, for example, on physical activity). It also opens up the possibility of insuring those objects that insurers previously considered too risky.
Plus, the IoT greatly simplifies the dispute resolution process when an insured event occurs. In essence, the policyholder and the insurer receive the same objective information, so in most cases there is no dispute.
3. AI analytics.
The massive use of large language models like Chat GPT has become the main trend of our time in many areas of human activity, but insurance (especially corporate) is noticeably different in this sense. Incomplete and inaccurate answers of such models can lead to serious problems, moreover, they are very limited in data collection due to various restrictions, including legislative ones.
However, analytical AI tools based on big data should be in demand in the market. Such services help insurers calculate risks to more accurately, identify suspicious behavior or fraud, offer personalized insurance products, etc. They are useful to policyholders for internal analytics, risk management and/or evaluation of the effectiveness of previous contracts, analysis of losses, etc.
In particular, such a service should be able to collect and analyze all insurance offers according to given conditions and give the customer the best insurance options and rules. At the same time, the best not only in obvious and price parameters, but also in other significant parameters.
For example, the policyholder can determine a certain weight for each parameter – and depending on this choice, the AI assistant will prepare one or another list of the most preferred options.
4. Automation of tenders.
Tenders in many cases help reduce the contract price by forcing insurers to compete with each other. However, in the current conditions, the independent organization of the tender is a difficult task that requires substantial time and organizational costs. Therefore, it is often ineffective to conduct them when concluding small contracts.
The situation changes in the case of automation of the process, when both the organizer of the tender (insured) and its participants (insurers) require minimal efforts.
In this sense, large universal tender platforms do not solve the problem in full, since they are not tailored for the corporate insurance market. Therefore, specialized tender services appear, which just allow to make the process as simple and convenient as possible.
5. Creation of ecosystems.
This trend, in fact, unites the previous ones. Similar ecosystems that unite policyholders and insurers are created on the basis of SaaS solutions, and inside, to one degree or another, various services can be implemented – tenders, AI modules, etc.
Moreover, on such a platform, it is easier and more efficient to combine these services than to implement them separately. For example, an analytical AI module will be able to provide the most useful and relevant information if it is trained on big data in the relevant industry area, that a large platform is capable of providing.
Such ecosystems have long transformed many markets (taxi, car sharing, hotel booking, etc.). In insurance, this process is just beginning – both in Russia and abroad.
In general, we can say that innovations and fashion trends come to the insurance sector with a certain delay. What are not only disadvantages, but also advantages. The market adapts for itself those solutions that have been effective in other industries.
By Igor Kononov, founder of the InsurTech platform AIINS