- Insurtech will give insurers access to a higher quantity and quality of data while AI will help them interpret vast amounts of data to transform the industry.
- Streamlined customer interaction may override agents but also improve satisfaction.
- Incumbents and insurtech startups must cooperate to meet regulations, and make a viable future.
- Customer-centric services will ultimately determine profitability and stability.
Technology has changed the way we shop, the way we seek medical help, the way we exercise, commute and even how we make friends.
A similar effect is now being witnessed in the insurance sector. Long seen as an old-fashioned industry, Insurance is now being transformed by innovations like wearable devices, GPS, drones, Internet of Things (IoT) and social media to become what is known as Insurtech.
By trying out new openings that larger insurance firms have less incentive in, insurtech startups are offering products like ultra-customized policies, social insurance, competitively priced premiums with the use of collected data.
“ InsurTech is any new, innovative technology or idea that’s set to improve insurance delivery across a business system. Simple as that.”
Ted Devine, CEO, Insureon
THE FUTURE OF INSURTECHS – OPPORTUNITIES AND CHALLENGES
Increasingly efficient and readily available customer data
Through insurtech startups, the industry will expand their bank of knowledge dynamically. Application forms or historical claims data have been the traditional source of information.
Now, insurers will have a spectrum of technological innovations at their disposal to improve their offerings. These include devices that monitor: health and biometrics, car and home sensors, satellite images, search patterns, location history, social media usage and much more.
Automated interpretation of data will evolve the sector
Sophisticated Artificial Intelligence (AI) can help analyze vast amounts of data to process brand-new insights.
For example, in auto insurances, car sensors will help develop policies where customers pay only for the distances they drive. Furthermore, home insurers will be able to encourage insureds to turn off stoves, lock doors, repair and prepare for forthcoming a natural phenomenon.
Overriding insurance agents
Convenience is a priority in today’s consumerist economy. From online applications to home delivery and pre-filled forms, there’s a lot that can be achieved when it comes to improving customer experience. Insurtech can bridge this gap, but in the process also supersede brokers and agents. On the other hand, these ‘middlemen’ can also use such developments as a chance to better service clients.
Regulations slowing down the revolution
Unsurprisingly, insurtech startups face several regulatory hurdles at every stage of development. Qualms like, “Does providing free HR software to customers violate anti-rebate laws?”, “Who is the licensed broker for insurances purchased without human interactions” and “Will humans be able to explain pricing risk as more AI becomes more accurate at determining it?” can create roadblocks.
However, with partnership from veteran incumbents, insurtech startups can find a way through or above such issues.
PAVING THE WAY AHEAD – A WIN-WIN APPROACH
Not disruption but transformation
Innovation in insurance (like any other industry) is seen as a threat to the opportunity of incumbents at the start. But as technology creates more enterprising and commercial avenues within the industry itself, there is inevitable cause for insurtechs and incumbents to partner and make progress together.
From the customer, for the customer
With an increasingly-younger audience, experts predict a demand for highly-concentrated products like insurance for cameras, laptops, tablets etc. A growing understanding of the millennial generation that wants new kinds of on-demand services can help relook at product formations. Innovations that will help provide increasingly personalized solutions, transform transactions and reduce friction will not only win more customers but also make room for new business models.
Collaboration more fruitful than competition
Cooperation between incumbents and insurtechs is key to accelerate the viability and profitability of technology in insurance. Insurance companies (both incumbents and insurtech startups) will have to realize that one type of company can’t do everything.
If the resources of big players and dynamism of new insurtechs are used together towards a bigger goal, the insurtech future can arrive sooner than later.