What can Insurance Industry learn from $500 Billion Gambling Industry?
People may find it weird to use Insurance and Gambling in the same sentence. Their thinking is not flawed. Gambling has a negative connotation for most of the population as it is linked to heavy speculation and losses for the common masses. Whereas insurance is meant to protect oneself from future uncertainties and events that can cause serious financial and emotional turmoil for an individual. Insurance is all about mitigating risk whereas gambling is all about taking risks. Both the industries work on different mindsets and thinking. But the basic structure is somewhat similar for the two industries. It is all about calculating the odds that are in favour of an event happening and mitigating the effects of it in case of insurance. Whereas taking advantage of the odds and taking a chance in case of gambling. In short, it is the same function and information gathering of both the industries, the only difference comes in the usage of the information. This is the point that makes us use Insurance and Gambling in the same sentence. There can be a similarity in the technology that is used by both industries as it is majorly calculations about probability of events, risk profiling, fraud detection and improving the customer experience that is done in both industries.
Insurance Industry over the years have been slow and resistant to change and adapt to the ever-increasing disruptions in the digital and technological arena. This luddite thinking and actions have resulted in new and upcoming start-ups and insurtechs that are ready to disrupt the landscape of insurance with innovative business models like P2P Insurance model as well as ingenious digital technologies like Artificial Intelligence, Blockchain, Virtual and Augmented Reality. The story is somewhat different in the case of the Gambling Industry which is expected to have a market value of around $565 Billion by 2022 and growing at a good pace of around 5.9% annually [1]. Amid all the negative references, speculations or high adrenaline action, these casinos and online gambling companies have been at the forefront of technological disruptions and innovations.
Technological Advancements in the Gambling Industry
Over the years, the gambling industry has tried to solve the problems that were faced by the big casinos, lottery houses and the new entrants in online gambling. With the use of state-of-the-art technology, these players have tried their hand at solving some of the issues and have in a way seen positive results.
- Customer Experience: Like most other industries, here also customer experience plays a vital and crucial role for the businesses. One of the main reasons why someone goes to a casino or logs into an online casino is to escape the same monotonous and boring routine they have and feel the experience and thrills of gambling for some time. With the advent of Virtual and Augmented Reality, these online casinos have completely transformed the customer experience to mimic an actual casino visit. Games like Texas Hold ’em Poker, Blackjack, Roulette etc. Apart from improved gaming experiences, these casinos and online websites has attempted to improve and streamline the payment and withdrawal process for their customers by allowing them to use payment methods like cryptocurrencies and wallets to make their experience comforting and hassle free. These processes are facilitated by leveraging Artificial Intelligence and Machine Learning based Chatbots. These assist the customers in payments, navigation and grievances that they have. These advancements have transformed the customer experience and improved the profitability of the business [2].
- Fraud Detection and Risk Management: Casinos are vulnerable to several frauds over time and the industry has tried to introduce new solutions to solve this problem. The use of Facial Recognition software has been one of them. These use AI/ML algorithms to detect the facial images of persons entering casinos and can help in mitigating the risk of frauds by acting against them. Not only casinos but online gambling websites have unitized similar algorithms for document reading etc. Blockchain based distributed ledgers are in use by new and upcoming start-ups to disrupt the online gambling industry and introduce a comparatively fair infrastructure for players with databases and records of past games and wins to increase trust in the industry [3].
- Data Collection and Analysis: The online gambling business currently sits on a goldmine of data from their users that can be used in analysis of the customers and User Profiling. The data can be collected from credit cards usage, the customer registration and by a tracking of the games and apps that are used by the customer. Taking privacy laws and sensitivity into minds, these data collection processes are permission based. But advanced Big Data Analytics is used to assist the companies to build a 360-degree customer profile by the companies to better target the customer with personalized marketing and generating a customer risk profile for assessing company gains from the same.
Lessons for Insurance Industry
The entire discussion about the main challenges and solutions for gambling industry was made to see if the insurers can adapt some technologies for their usage. This is since the insurers also face similar challenges like the gambling institutions faced:
- Improving Customer Experience
- Fraud Detection
- Risk Management
- Advanced Data Analytics
- Customer Profiling
These technologies already have several use cases for insurance by various insurtechs and start-ups. With each passing day more and more insurers are switching from old legacy-based systems and channels towards newer digital offerings. These are done to solve the challenges in the insurance industry. Below are some applications that can disrupt the insurance industry:
- Using Convolutional Neural Network and Augmented Reality based applications to estimate the damage costs for a vehicle insurance. A picture of the damaged vehicle can be evaluated by the software to estimate the cost of repairs and the claims figure.
- Leveraging Blockchain based architecture for fraud detection in insurance by having a shared ledger among the insurance companies and mitigate the risk of frauds like No Claims Bonus (NCB) or multiple claims.
- Using Artificial Intelligence & Machine Learning based software for document reading, document classification that can assist in claims management and a seamless process for customers.
- Using Digital Technologies like Digital Marketing and Mobile applications to provide an Omni Channel Distribution to the customers.
- Leveraging Chatbots to improve customer experience and journey as is used by insurtechs like Lemonade where the entire claims management process is automated by chatbots.
These are few of the countless examples in which insurers can leverage the digital technologies and evolve to greater heights.
Conclusion
The comparison between Insurance and Gambling Industry was done to understand what all innovations and disruptions can be introduced in the former. Insurance in 2030 will be a different beast altogether, with integrated and state of the art technologies and innovations, providing better services to the customers and improving lives across the globe.
References:
[1] The Business Research Company (www.marketresearch.com, February, 2020): The Growing Gambling Industry: Forecasts, Technologies, and Trends;
[2] Albert Tuman (www.tmcnet.com, February, 2020): How technology has changed the Gambling Industry
[3] Gerald Fenech (www.forbes.com, January, 2019): Blockchain In Gambling and Betting: Are There Real Advantages?
