What is Insurtech?

Topics: Technology

Summary: Innovations from Insurtech companies have had a significant impact on insurance carriers and the consumers that purchase their insurance products. Learn what Insurtech means and how its technology has fundamentally changed the insurance industry.

What is Insurtech?

The insurance industry is a very old, cautious and highly regulated industry. In recent years, Insurtech companies have spurred change within the insurance sector and helped insurers reimagine how they serve their customers via digital innovation.

Prateek Sangal, Head of Digital Strategy at AmTrust, describes the changes, “When we start thinking about the commercial insurance landscape, what we see is that the majority of commercial insurance is still processed and transacted in a manner that has not changed or been disrupted for the past 80 years. An outside-in force has shown us that we need to disrupt the way we manufacture, underwrite, and bring these products to market to create efficiencies throughout the commercial insurance value chain.”

The Meaning of Insurtech?

Insurtech, a combination of the words insurance and technology, uses technological innovations to transform the insurance industry by improving efficiencies, reducing costs for consumers and carriers and improving customer satisfaction. Insurtech is a subset of FinTech, or financial technology, whose technology has likewise transformed the financial industry. The first industry sector to benefit was health insurance. Friendsurance, based in Germany, was one of the original Insurtech startups that introduced peer-to-peer insurance in 2010.

Advances in technology such as artificial intelligence (AI), the internet of things (IoT) and blockchain have made it easier for insurance companies to gather insights from customer data to improve their business operations. For instance, the internet of things (IoT) technology helps insurance carriers collect data and interact with their customers through omnichannel communications, such as mobile apps. In turn, consumers can find, identify and cover all of their connected devices by simply tapping an app.

Why is Insurtech Important?

Insurtech products have impacted all aspects of the insurance industry, such as distribution, marketing, product design, underwriting, claims management and more. With the help of Insurtech technology, insurance companies have created customer-facing apps, in-car monitoring devices, wearable activity trackers, and SaaS platforms. The data from these tools have created customized policies and dynamically priced premiums options like never before.

For insurance customers, Insurtech ensures the purchasing process is faster and easier. Small business owners have more options available; they can research, compare prices and purchase policies online without physically visiting a broker or an agent.

Bruce Saulnier, President AmTrust Warranty and Specialty Risk further explains the importance, "Consumers are seeking technological and digital innovations that enhance their buying experiences, while providing options to meet their own personal economic requirements. FinTech and Insurtech innovations are designed to improve the efficiency of the transaction, provide a customer first experience and broaden the distribution and selection of insurance."

How Big is the Insurtech Market?

Over the past ten years, Insurtech startups have garnered $16.5 billion in investments to help bring innovation to the insurance industry. At the beginning of 2019 alone, over $2.2 billion was raised by startups. However, Deloitte found that new Insurtech launches have slowed down more recently, and insurance companies are more discerning in their investment options.

How is Insurtech Transforming the Insurance Business?

Insurtech is changing both the personal and commercial insurance industry by offering increased connectivity, personalized products, full automation and better data. Insurtech encompasses new technologies that force insurance companies to reimagine what’s possible with insurance. Additionally, Insurtech startups are helping improve the customer experience, simplifying policy management and increasing competition in the insurance industry.

The data and analytics that are provided by Insurtech technologies have impacted the insurance industry's internal processes, making underwriting and claims processing more efficient. Insurance companies can make more accurate predictions about the risk for a customer resulting in better coverage and substantial savings for the carrier and the insured.

The digital innovations were utilized first and have been most visible in the personal insurance segment, where individuals can access policy choices via phone apps or track wellness activities for employee health programs.

Currently, the commercial insurance industry has integrated Insurtech technology into their products allowing small businesses to utilize chatbots for quick information or shop for multiple types of insurance in one application, saving them time and energy.

What is the Future of Insurtech?

In 2020, the global Insurtech market was valued at 2.72 billion. The Insurtech market is expected to grow by over $33 billion from 2021 to 2025. The need for better efficiency and greater customer service experiences in the insurance industry will increase the reliance on Insurtech technologies.

Insurtech offers virtually endless possibilities. AI and machine learning will enable the insurance industry to process and analyze immense amounts of data, which could drive change to every sector of the insurance industry. The technologies also allow insurance products to be priced more competitively in the marketplace.

In today’s digital, on-demand world, customers want the ease of use, cost savings and products customized to meet their needs – and the changing demands of their businesses. Insurtech enables insurance companies, large and small, to do it all.

Insurtech Growing Pains

Despite the increased customer demand for innovation from insurers, there are still some barriers to implementing Insurtech industry-changing technologies, including potential cyber attacks, data privacy issues and government regulations. Plus, the human element will never go away. There will always be complex insurance processes that will still need human interaction.

Innovative Digital Experiences from AmTrust

By tapping into the latest technologies, AmTrust’s policyholders, agent partners, customer service representatives, claims specialists and underwriters all stand to benefit in some way.

AmTrust leads the way with innovative digital experiences that allow our partners and broker community to quote, bind and manage policies in real-time. Our data-driven approach and digital intelligence help create a full suite of digital capabilities supporting the entire life cycle of workers’ comp customers. AmTrust is also digitizing other commercial products, including BOP, Package, Cyber and other specialty lines.

“As things stand, AmTrust is a market leader on digital distribution for workers' compensation. We have 30-plus live integrations with agents and brokers of all shapes and sizes,” Sangal said. “For the past two years, we have been developing and building out our core line, which is our workers’ compensation line, and have made that product and the decisions for that product available to the market via an API integration.”

Partner with AmTrust Warranty and Specialty Risk

AmTrust Warranty & Specialty Risk is a leading global provider of service contracts and insurance for third-party administrators, manufacturers, financial institutions, retailers and distributors. Our programs are tailored to your customers’ interests and strategic goals. From consumer product warranties to protect customers’ investments on items like smartphones, appliances and autos to home warranty coverage that provide homeowners peace of mind, we are your trusted partner for extended warranties. Contact us to learn more about our specialty warranty solutions.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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