InsurTech (insurance technology) is starting to catch up its close relative FinTech in terms of new startups and bring innovation to the traditional insurance world
InsurTech is the technology that lies behind the creation, distribution and administration of insurance business. It ranges from consumer wearables and smart phone apps to claims processing tools, to online policy handling and automated processing.
What Are The Benefits of InsurTech?
New technologies help InsurTech companies collect and analyse customer data so they can target the right customers at the right price, encourage them to act in a less risky way and cut the cost of claims. They are improving and sometime replacing existing insurance services, making the entire insurance process simpler and more efficient for both brokers and customers.
Many InsurTech companies are providing B2C and B2B insurance services to new consumer segments. Or too customer segments that would historically have been under-served or un-served by traditional insurance providers. Legacy tech systems and business models are not sufficiently agile to allow traditional insurance provides to service these new consumer segments.
Examples of this innovation include, Zego providing private hire, scooter and car insurance to people working in the gig-delivery economy; Marshmallow providing mobile-first car insurance to those previously underserved; Homelyfe overs insurance specific to homeowner and renters contents, Bought By Many provide tailored pet insurance and Flock specialise in drone insurance.
In an era of big data insurance companies are looking to find new sources of information including social media. They are harnessing new technologies to process all this data, using Artificial Intelligence (AI) and Machine Learning (ML) to make better predictions and applying this knowledge to have better decision making and planning within their business.
Are Traditional Insurers Buying Into InsurTech?
Many traditional insurers are backing InsurTech companies as there are potential benefits to their business models. For example, new InsurTech home security systems that determine when properties are unoccupied, can also add value to traditional Insurance companies. Apps offering insurance on an hourly basis or InsurTech’s creating automatic digital insurance agents and chatbots that use personalised user data to tailor conversations with customers – both can be harnessed by traditional insurers.
Blockchain technology is also being utilised in a number of ways. Firstly to enable insurance companies to share data to possibly reduce theft and insurance fraud. Beyond that however, Nexus Mutual are a people power alternative to insurance, who are building an alternative risk sharing platform. Using Ethereum blockchain they provide cover against smart contract failure and allow people to share risk together without the need for an insurance company.
By the end of the 2020’s, telematics will drive car insurance policies, customers will be able to drop in and out of insurance policies on a pay-per-use basis, smartphones and wearable devices will transmit data to brokers to inform policy decisions and risk assessments and smart contracts will make managing customer policies and claims simple, transparent and secure.
Leading UK InsurTech Companies Include:
- Nexus Mutual
- Bought By Many
- By Miles
- Artificial Labs
- Digital Fineprint
- Digital Risks