The rise of Artificial Intelligence (AI) has been reshaping the insurance industry by elevating customer experience through hyper personalisation, predictive analytics and automation. From AI-driven chatbots providing instant support to machine learning models refining risk assessment, insurers are leveraging cutting-edge technology to offer seamless, customer-centric services.
In our “Value Over Growth” paper, we explored the significance of digital transformation in reshaping the insurance landscape through hyper-personalization. Building on that, Digital Twins are now emerging as a critical intersection between Insurtech and innovation, driving product evolution and personalized offerings. These virtual models bridge the physical and digital worlds, allowing insurers to create real-time, data-driven simulations that drive product evolution and highly personalized offerings. Originally used in industries like manufacturing and healthcare, digital twins are now gaining momentum in insurance, enabling insurers to model policies, predict risks, and fine-tune coverage with unprecedented accuracy.
What Are Digital Twins?
“A Digital Twin is a virtual replica of a real-world asset, process, or even an entire customer profile. It functions in real time by continuously integrating the latest data from various sources.” According to Gartner, by 2027, 20% of B2B sales organizations will use Digital Twins of Customers to enhance customer experience and drive better revenue outcomes.
The brand GUESS became a game changer in this area by creating the digital twins of its showrooms by enabling the customers with the ability to experience a seamless virtual shopping journey. Similarly, now insurers are trying to engage their customers using digital twins in underwriting, risk management and claims processing.
How Digital Twins Power Hyper-Personalization in Insurance?
Let’s imagine a scenario where policies can be adapted to your lifestyle in real time to offer you the ultimate insurance experience. This is what digital twins can do for you. Digital twins help insurers to create dynamic customer profile based on the risk patterns and behaviour by integrating data from IoT devices, medical records, driving behaviour, and home environments.
This level of hyper-personalization brings game-changing benefits:
Tailored policies: Based on the intensity and level of risk the coverages will be adjusted in real time.
Proactive risk management: Alerts and recommendations are given to customers in prior to reduce risk
Fairer pricing: The actual behaviours are taken in account rather than broad risk categories for calculating the premiums.
For instance, a digital twin can analyse a driver’s real-world behaviour and adjust their insurance premiums accordingly. Similarly, life insurers can leverage lifestyle trends to offer personalized wellness programs, ensuring a more value-driven relationship with customers.
Real-World Applications of Digital Twins in Insurance
Nexar’s AI-Powered Digital Twin of U.S. Roads
Nexar, an AI-driven computer vision company, along with State Fram Ventures has developed an AI-powered digital twin of U.S. roads using dashcam footage and real-time AI analysis. This helps insurers to assess risks, streamline claims processing and optimize coverage as the system provides live updates on road conditions. Nexar, enables the insurers to predict potential hazards and improves the risk assessment accuracy by dynamically mapping roads and accident-prone areas.
Swiss Re’s Ship Risk & Manufacturing Digital Twins
Swiss Re has introduced a Ship Risk Digital Twin, which predicts maintenance needs to prevent costly breakdowns by continuously monitoring a ship’s real time data. This makes the predictive capability invaluable as the machinery breakdown usually for cargo ships claims up to an average of USD 600,000 per claim
Beyond this Swiss Re also have Manufacturing Risk Digital Twin that further enhances efficiency by notifying suppliers and manufacturers of potential disruptions due to any delay in the ships route because of any weather conditions. This interconnected system helps in reducing financial losses, optimizes logistics, and ensures that insurance solutions proactively support businesses rather than merely react to risks.
The Future of Digital Twins in Insurance
The evolution of digital twins and its integration into insurance tells us that it more than just a technological advancement- it’s a paradigm shift in how insurers engage with customers. By creating real-time, evolving customer profiles, insurers can build stronger relationships based on trust, transparency, and proactive support.
Rather than being just about pricing and claims, digital twins redefine insurance as a service that adapts, predicts, and personalizes coverage like never before. As insurers embrace this technology, we can expect a future where insurance is not just reactive but customer-first, intuitive and predictive
