The insurance sector has been transformed due to real-time data analytics, diversity of data sources, and cloud computing. Digital twin technology has the potential to disrupt this field further as insurance companies experiment with newer technologies to understand their customers better.
Digital twins are virtual representations of physical assets. They are made possible by the Internet of Things(IoT) which gathers data from the real world, and Artificial Intelligence, which reconstructs this data from IoT.
In my view, digital twins can offer transformative improvements in core insurance services leading to faster claim settlements, prediction of new types of risks, and an accelerated underwriting process.
Let’s take a look at how digital twins can enhance four important areas in the insurance sector.
Digital twins can accelerate claim processing by reproducing the conditions of the claim, like car accidents or fire breakouts. Using these simulations, insurers can virtually assess the impact on the property of the applicant. This removes the necessity for an expert to physically assess the damage and speeds up claim processing to deliver better customer experiences. Digital twins in claim processing can shorten the claim cycle by up to 400%.
The capability of digital twins to create simulations based on real-time insurance data can help underwriters to improve risk assessment and fix competitive premiums. Insurers can expand their data using digital twins to include risks around car accidents, heart attacks, and even catastrophic events like an earthquake.
Insurance companies can utilize digital twin technology to create digital copies of insured assets, customer behavior, and external events that could affect the insured assets. This can help them obtain a better understanding of the volatile market. Through simulation of customer behavioral patterns, the insurers can understand customer journeys better and use this information to improve the sales of insurance products.
The cost of insurance fraud in the United States is estimated to be $40 billion per year. Digital twins can help detect fraudulent claims by simulating the events that lead to the damage described in the claim applications. Insurers can verify the claims by comparing the simulated data and the applicant’s data. Claims that are not consistent with the simulated data can then be flagged as fraudulent. This can reduce the liability of the insurer and save costs.
Digital twins are rapidly changing the dynamics of business operations in the insurance sector, and companies can embrace this disruptive technology to evolve and adapt faster. It can help insurers prepare for a more agile future where they can easily optimize core processes, gain the most out of data, and assess disaster readiness.
Digital twins are poised to reshape the insurance industry. What are your thoughts on digital twins in the insurance sector? Let me know your opinions in the comment section.