From online purchases to verification in "Diia": Top 5 innovations in auto insurance in recent years.

The digitalization of the auto insurance sector has significantly simplified the process of obtaining and verifying policies for car owners in Ukraine. From integration into popular applications like "Diya" to the emergence of new features in insurance company mobile apps, innovations enhance convenience and transparency for policyholders. This article from RBC Ukraine discusses the most important technological solutions that improve user experience in auto insurance.

Technological innovations, much like in other service sectors, are increasingly penetrating the insurance industry. Whether a driver is purchasing standard "Auto Liability" insurance or insuring their vehicle with comprehensive coverage, technologies are gradually transforming more and more processes in each type of insurance.

For car owners, digitalization means easier access to services, faster service, and greater transparency in interactions with insurance companies. Technologies streamline many procedures, from policy issuance to claims settlement.

For insurance companies, this is also beneficial, as they operate in a relatively low-margin business, and digitalization helps make it more efficient—enhancing customer satisfaction, reducing administrative costs, and minimizing the impact of human error. This, in turn, increases the transparency and accuracy of processes, which is critical for aspects such as risk assessment, premium calculation, and compensation payments. At the same time, experts from Ukrainian insurance companies note that investments in IT are investments in the future.

"We face the challenge of reaching the level of European countries in two main aspects: legislation and technology,” says the chairman of the board of NASC ORANTA, Yacek Meizner. “Companies are investing in technology, but it should be noted that the Ukrainian market is relatively small, and in the short term, it cannot provide a financial return sufficient for the quick payback of these investments.”

Nonetheless, digitalization is becoming one of the key trends of recent years, although the services and capabilities of digital solutions may vary depending on the type of insurance. Let’s explore the innovations that have emerged in insurance over the past few years.

Innovation One: Electronic Policies and Service Personalization

Today, having a policy on a smartphone is already commonplace. Auto Liability insurance became the first mass electronic insurance product. Thanks to integration with central databases of the MTSBU, car owners can quickly obtain Auto Liability or "Green Card" (Auto Liability for traveling abroad) in digital format at almost every insurance company. While electronic policies currently exist alongside paper ones, starting January 1, 2025, they will only be issued online. Insurers claim that the process of concluding contracts and receiving payments will become simpler and more transparent.

"The transition to mandatory electronic policies is another step towards modernity that will reduce the number of counterfeits and simplify the verification of policy validity for law enforcement agencies,” says the project office director of INGO insurance company, Maxim Gavrish. “This solution will improve the manageability of insurance processes, making them more efficient and secure.”

In comprehensive insurance, not everything is as digitized yet. Most insurers do not offer online purchasing; instead, you can only receive consultation followed by an office visit. Insurance companies explain this by the complexity of the preliminary inspection process, vehicle assessment, and electronic signature of the insurance contract. Nonetheless, some solutions are already emerging. Maxim Gavrish confirmed that this year INGO updated the feature for self-inspection of the vehicle through a specialized mobile application. "This allows car owners to conduct inspections at any convenient time, reducing the time spent on physical visits to offices,” he noted.

Personalization of insurance services is also strengthening. As a basis for calculations by actuarial specialists, it has existed for a long time but is now becoming deeper. For instance, in the new Auto Liability law that will come into effect on January 1, 2025, there will be no state regulation of insurance policy prices, thus segmentation and personalization will become a necessity for insurers.

"This opens the way for using modern risk analysis tools,” believes Yacek Meizner. “They will allow for the consideration of factors such as driver age, driving experience, type of vehicle, average mileage, region of residence, history of insurance claims, and even driving style, which can be assessed through telematics systems.”

In telematics, the "pay how you drive" approach is gaining popularity. Thanks to special equipment during a trip, the system analyzes numerous parameters and not only records them but also motivates changes in the driver's driving style. A specific driver can see their mistakes while driving and avoid them in the future, while a fleet company can build its management policies using this technology.

A recent study in the EU showed that this model is viable—more than three-quarters of clients are willing to share personal data to receive cheaper coverage and personalized financial and insurance offers.

Innovation Two: Insurance Payments and European Protocol

Digitalization has significantly altered the process of claims settlement and payments, making it faster, clearer, and more convenient. First and foremost, the process of recording insurance incidents has been simplified. For uncomplicated road accidents, no experts or personal visits to the office are required. The incident is documented using the European Protocol, which also operates in electronic format. This allows for quick agreement on details between the parties and immediately initiates the payment process.

The application and its web version feature a user-friendly interface with prompts that help correctly enter all necessary information about the accident, including location, time, circumstances, and photographic materials. Completing the European Protocol takes about 15 minutes, while calling the police and drafting a regular protocol can take several hours. The electronic document is automatically forwarded to the insurance company to start the claims settlement process. Thus, the review period is shortened, and payments are expedited.

Secondly, the process of collecting documents necessary for insurance payments has been simplified. Previously, collecting documents required running around; today, leading insurance companies allow them to be uploaded online without visiting an office. The insured party can track the status of their insurance case in real-time through the mobile application or personal account on the company's website.

Insurers assert that this ensures predictability and minimizes calls to contact centers. Payments for insurance claims are also primarily conducted electronically. After a payment decision is made, the insured party receives funds either to their bank card or to the service center that will perform the repair work. According to statistics from leading insurers, the payment time has reduced from several days to several hours in standard cases.

Experts believe that claims settlement has even greater potential for digitalization. They argue that ideally, the entire procedure should be fully transitioned online.

"This is still difficult to achieve, as many factors need to be considered,” notes Yacek Meizner, chairman of the board of NASC ORANTA. “Among them, undoubtedly, are the experiences of both the client and the insurer, the technology that needs to be used, and, most importantly, understanding what we expect during the settlement. The client must independently inspect the damaged vehicle, provide video or photographic documentation. And this may be the simplest step to start the online settlement process. Subsequently, the insurance company should quickly assess the material submitted by the client and provide a repair cost estimate, the geolocation of the service center to which the vehicle needs to be moved for repairs, and so on. And I’m talking about minutes, not days or weeks.”

Innovation Three: Mobile Applications

Mobile applications of insurance companies are becoming multifunctional platforms. According to analysts at McKinsey, leading global insurance companies spend nearly $225 billion annually on IT research and mobile application development. However, experts note that the overall indicator in the industry remains relatively low, and outdated IT systems only slow down innovations. Overall, nine out of ten insurance companies have identified outdated software and infrastructure as obstacles to digitalization.

Ukrainian insurers confirm these facts while also noting the high cost of investments in this area. "On average, the development of a mobile application for an insurance company costs between $250,000 and $500,000,” clarifies Yacek Meizner. "The problem is that everyone is trying to create a mobile application, to develop services for clients related to purchasing and servicing policies, including elements of claims settlement. But unfortunately, this leads to very low customer interaction with the mobile application, typically once or twice a year, making the investments impractical.”

Nonetheless, insurers continue to invest in this direction. INGO confirmed that they are finalizing the development of their own mobile application. "The launch of this project was postponed due to the challenging circumstances at the beginning of 2022, but now the company has fully resumed work, and it is currently in the final stages,” said Maxim Gavrish. "The new application will not just be a technical solution but the foundation for a new business model. It will ensure the integration of innovative services and open a new level of interaction with clients while also facilitating the transformation of the company's internal processes.”

ORANTA, which has already released its application, claims a different approach to its functionality. "We want the mobile application to solve all of the client's problems and be part of their daily life,”