By Yair Smith, VP, Strategic Development, AmTrust Financial Services
Offering increased connectivity, personalized products, full automation and better data, insurtech is transforming the insurance industry.
Building momentum around the world, insurtech encompasses many segments of new technology that are forcing insurance companies to reimagine what’s possible with insurance. This mega trend presents an incredible opportunity for current providers to improve the relevance of their offerings, paving the way to tremendous growth. Additionally, insurtech startups are making quite a splash by improving the customer experience, simplifying policy management and increasing competition in an already crowded space.
Able to leverage data better than ever, insurance companies utilizing insurtech can make more accurate predictions about risk. This key development can result in better coverage as well as substantial savings for both the provider and the insured.
Evidence of insurtech’s emergence can be found in these impressive numbers:
- Over $3 billion was invested in insurtech worldwide in 2018 alone, according to FinTech Global.
- According to the 2017 World Insurance Report, nearly one-third of customers worldwide were utilizing insurtech, either exclusively or in combination with an established insurance company, to fulfill their insurance needs.
Insurtech offers virtually endless possibilities
Companies are using insurtech to create everything from customer-facing apps and in-car monitoring devices to wearable activity trackers and SaaS platforms. As a result, ultra-customized policies, social insurance and dynamically priced premiums are no longer fantasy; they are all real options. In the small business insurance world, insurtech works to increase the options business owners have, keep costs low and speed the delivery of insurance coverage.
The insurtech space
consists of several sectors including:
- Employee Benefits Platforms
- Insurance Data/Intelligence
- Consumer Management Platforms
- Insurance Comparison/Marketplace
- Insurance Education/Resources
- Insurance Infrastructure/Backend
- Insurance User Acquisition
- Life, Home, Property & Casualty Insurance
- Peer-to-Peer (P2P) Insurance
- Single-Product Insurance
Disruption without distortion
Seeing the power and promise of insurtech, AmTrust has joined forces with a number of technology-driven startups, several based internationally. With their support, we can:
- Equip our agents and customer service representatives (CSRs) with video chat capabilities including co-browsing, document interaction and certified e-signature writing.
- Use chat-bot capabilities to support our CSRs and automate client interactions, improving service times and communications between our customers and our billing, payment and policy administration platforms.
- Utilize artificial intelligence (AI) to improve our policy quoting, binding processes and claims workflow.
- Find complex patterns in our data using an AI-powered research engine; from these patterns, business and process recommendations are created.
- Help consumers find, identify and cover all of their connected devices, from smartphones to smart home hubs, by simply tapping an app.
By tapping into the latest technologies, our policyholders, agent partners, customer service representatives, claims specialists and underwriters all stand to benefit in some way.
Insurtech technology breeds opportunity
Government regulation and the huge costs traditional insurers have had to bear to keep pace with technology initially slowed insurtech’s growth. Today, more and more entrepreneurs are finding ways to marry insurance and 21st century technology.
The first industry sector to benefit was health insurance. Friendsurance
, one of the original insurtech startups, is a Berlin-based company that introduced peer-to-peer insurance in 2010. Using an online platform, customers select the insurance product they want. They are then connected with a small group of customers with a similar coverage need. If no claims are made by the customer or any of his or her connections, the customer receives a yearly cashback. It’s an example of social insurance in action.
Another key disruptor is Oscar Health Insurance
, a marriage of technology, healthcare, design and data. Since its founding in 2012, the “hipster” insurance provider has been on a mission to provide patient-centered healthcare coverage. In addition to healthcare, insurtech has touched the rest of the insurance industry including life, property and casualty
, reinsurance and title.
The emergence of the sharing economy, along with artificial intelligence (AI) and other customer-centric technologies, has flung open a huge window of opportunity for insurtech startups. With an eye on the future, entrepreneurs are creating innovative insurance products to meet a growing demand for customization, cost savings and convenience.
Potential growing pains of insurtech
Despite the increased customer demand for innovation from insurers, there are still some barriers to implementing these industry-changing technologies:
- Complex insurance processes often warrant human interaction, whether face-to-face or over-the-phone.
- As insurtech continues to gain momentum, more and more data will be stored digitally, opening the door to potential problems with privacy issues and cyberattacks. (Related: How to help protect customer information)
- Government regulatory hurdles will require concerted efforts between entrepreneurs, insurance firms and legislators.
Full speed ahead: The future of insurtech
User-based auto insurance policies. Automated workflow processes. Drones surveying areas hit hard by hurricanes. Whether it’s pricing or underwriting policies, detecting fraud or managing claims, insurtech is fueling our industry’s evolution.
And the best is yet to come.
Twenty-first century technologies like artificial intelligence (AI) and machine learning will enable the insurance industry to complete a paradigm shift from “detect and repair” to “predict and prevent.” Additionally, using AI to process and analyze vast amounts of data will ultimately drive change across every sector of the industry, from property and casualty to home and life.
And that change will be a welcome one. According to a Future Workforce Survey
published in Insurance Journal in May 2018, insurers that invest in AI and human-machine collaboration at the same rate as top-performing businesses could boost their revenue by an average of 17 percent and their employment by 7 percent by 2022.
The days of limited coverage options and antiquated processes are over. In today’s digital, on-demand world, customers want ease of use, cost savings and products customized to meet their needs – and the changing demands of their businesses. Insurtech is enabling insurance companies, large and small, to do it all.
On the radars of insurers around the globe, insurtech is breathing new life into a once-static industry, making it more vibrant, sustainable and agile.
Yair Smith is a Vice President of Strategic Development at AmTrust Financial Services, a multinational property and casualty insurer headquartered in New York City. Based in Israel, Mr. Smith leads AmTrust’s insurtech and other innovation initiatives to enhance the company’s product offerings.
For more information, contact Mr. Smith at email@example.com.