Author: Nick Reese
Date published: July 23, 2024
The next generation of network technology coupled with artificial intelligence (AI) is opening up the floodgates for insurance firms to reinvent customer relationships, according to Verizon’s report Reinventing Insurance Customer Relationships with 5G-Powered Enterprise Intelligence. 5G for the insurance sector can help enable insurance firms to better understand their customers’ needs, expectations and behaviors to help insurers deliver a more personalized service, create new products and transform the customer experience.
The use of technology is especially key when reaching Gen Z and Millennial customers. According to a new study from the Society of Actuaries Research Institute on younger consumers, 61% of respondents between the ages of 21-42 intend to purchase one or more types of insurance within the next 12 months, and about half prefer to purchase online. Digital-first Gen Z and Millennials bring with them new expectations when it comes to customer service, speed and quality of service, born of their experience in other industries from online shopping to food delivery to booking travel. Accordingly, insurers can use near real-time data and connectivity to help transform insurance from a transaction to a relationship.
According to the Verizon report, insurance companies now have an opportunity to harness the power of artificial intelligence (AI) and augmented reality (AR) to provide on-demand, immersive, personalized experiences that can elevate customer interactions.1 By understanding the multifaceted impact 5G and IoT for insurance companies can have on the customer experience, providers can take advantage of one of the key technology trends in the insurance industry impacting business growth and customer retention.
5G networks can deliver high speeds, massive capacity and low latency that can power emerging technologies such as augmented reality, virtual reality and artificial intelligence, which insurers can leverage to serve their customers in new and immersive ways.
5G connections can help insurance providers by facilitating near real-time connections where customer data is being created, including in the car or at home. By using data produced by sensors, wireless telematics devices, AI, customer interactions and more, insurance providers can leverage 5G and IoT to gain insight into the customer experience.
Insurers are leveraging the data and insight made possible by 5G to deepen their policyholder relationships. Here are three use cases that 5G for insurance companies can unlock.
As insurance rates rise, accurate, competitive pricing is key to gaining new customers while retaining existing policyholders when it comes time for renewal.
It has been predicted that standard 12-month fixed contracts will be, replaced by personalized or dynamic pricing. For example, for car insurance, customers want their rates adjusted based on actual vehicle usage, rather than being locked into a static annual rate.2 5G can help insurers to generate dynamic pricing by using telematics and sensor data. This technology allows insurers to collect data transmitted directly from the source—such as a vehicle—to understand how the insured item is actually used. By leveraging near real-time data of individual customers instead of cohort tables, insurers can leverage dynamic pricing to provide lower rates for low-risk customers who drive under the speed limit or infrequently, even though they may belong to a traditionally high-risk cohort such as young drivers.
5G can help insurers swiftly and securely access, process and verify all data and documentation required for the claim settlement process by leveraging mobile edge computing (MEC) to process data close to the source instead of at a far-off data center. Because the data has less distance to travel, response time is improved. Not only does this improve the customer experience, but it can also help enhance business efficiency and productivity to drive bottom-line results.
For example, the power of MEC and 5G can enable customers to make a claim and get reimbursed right from a crash site instead of waiting days or weeks for a claim adjuster. A policyholder could photograph damage from a car accident and—from a safe location—immediately upload the images to the insurance company's website. From there, the whole process can be automated—from claim review to approval to customer direct deposit payment—all without the need to schedule time for an adjuster to inspect the car.3
Few people think about their insurer until it's time to shop for a policy or make a claim. With 5G, insurance providers can power technologies that can leverage data to create value and personalized engagements with policyholders that could help build trust.
One example is providing proactive communication based on weather events or emergencies. Using sensors connected to a 5G network to process near real-time customer location data, insurers could proactively analyze data and communicate to customers at risk of a major event. They could provide proactive tips and tools for staying safe, while also identifying which customers may need to file a claim so that they can get reimbursed more quickly.
5G networks can enable connections to massive numbers of IoT sensors and devices. These devices provide valuable usage and performance data from smart homes and cars, that can be analyzed in near real-time and can help insurers be proactive in the event of a potential emergency to help reduce risk.4 In fact, some insurance firms offer discounts to homeowners who use smart home devices that are designed to help detect potential threats, like theft, water damage or fire. For example, insurers could use IoT sensors located throughout a homeowner's water system to detect a leak, helping the homeowner minimize the damage by fixing an issue while it's still manageable. By preventing or minimizing flood damage in the first place, homeowners can save the time and hassle of filing insurance claims, replacing furniture and repairing walls, while insurers benefit as it reduces the risk of costly claims.
Using the right solutions powered by a 5G network can help insurance companies achieve Enterprise Intelligence with an agile network what is needed to help business leaders unify disconnected parts of their business and gain better insights into their customers’ needs. For example, Network as a Service can help enable firms to customize their network solutions, while 5G can provide the connective and bandwidth needed for near real-time data collection and analysis. With Enterprise Intelligence, insurance firms can leverage technologies to help realize such benefits as operational efficiency and reduced claim processing time, potentially contributing to an enhanced customer experience and customer retention.5
To learn more about how insurers use 5G and achieve Enterprise Intelligence, read Reinventing Insurance Customer Relationships with 5G-Powered Enterprise Intelligence. Find out how Verizon solutions for financial services can help your insurance business.
The author of this content is a paid contributor for Verizon.
1 Verizon, Reinventing Insurance Customer Relationships with 5G-Powered Enterprise Intelligence, 2023, page 2.
2 Ibid, page 4.
3 Ibid, page 5.
4 Ibid, page 3.
5 Ibid, page 5.