Evolution to Insurtech


What is Insurtech? 

The Insurtech domain recently marked its first decade on the calendar yet masses don’t have the slightest idea how impactful the field is. Short for Insurance technology- Insurtech is a very vast field of ever-evolving technologies used by insurance companies for increased efficiency and accuracy. 

The domain makes use of multiple modern-day fields like Big Data and Artificial Intelligence. Insurance companies are increasing their expenditure towards Insurtech every year with the hope to maximize profits.

 

 
Need and capabilities of Insurtech 

Insurtech, inspired by Fintech, was originally developed to meet the customers’ demand for digitization. Later companies adopted the idea because of the reciprocated benefits. Underwriters assess risk based on the individual’s history, as well as other factors that are deemed, important predictors. Companies have started automating the process of underwriting using Machine Learning. Companies have used patterns and previous data to create a model that can calculate personalized premiums by taking into account all demographics and risk factors. Internally, insurance companies can easily track all its employee’s and agents’ performance and sales. There have been multiple startups that are using this tech as you read this. “Haven Life”, a life insurance company in the US, uses Machine Learning to do the underwriting for basic policies, “Shift Technology” and “ControlExperts” are some of the emerging names that use Machine Learning for claims settlement and management. Shift Technology uses ML to deal with insurance claims while Control Experts have been using machine learning to perform insurance claims for the automobile industry. Both of them provide services to a big share of insurance companies.

 

Notable Innovations

One of the driving factors for business in the insurance industry has always been customer relationships. Customer relationships have a considerable impact on how many policies a company sells every year and how many existing customers it can retain, especially for general insurance companies where the policy duration is 1 year. If a company is reputed for it’s good customer relationships, then it’ll be easier for them to sell policies, even to a customer who is confused about which policy is best suited.  

 

Insurtech has made things very effortless for customers in this field since companies have developed “chatbots” and “virtual agents”. For instance, if you’re someone who is unsure whether a certain cause of death is covered by your policy then all you need to do is simply visit the insurance provider’s website and use this bot to check! This saves time and money for both the customer and the company. Since this is a replacement for the traditional call center, customers no longer have to hold their phones as they hear the infamous dialogue “your call is important to us” over and over and companies save their resources on the call center itself.  

 

Latest Innovation

Driving score is one of the latest developments in Insurtech. It is a lot like the credit score that banks use to measure whether a particular customer is eligible for a loan, credit card, etc. The driving score determines how safely someone drives, based on their past history, location and motion data. This affects your insurance premium, a good driving score means lesser premium! It is now possible to calculate this driving score using simple Machine Learning. In fact the company Root, a motor insurance company in the US has already started doing it this way. 

 

Future of Insurtech

We don’t know for sure what future holds for Insurtech however what we do know is that the field is certainly not at a dead end. According to multiple organizations, there are several new technologies that are being incorporated in this process. Blockchain is one specific mechanism that has huge potential and will be largely responsible for how the future of this domain takes shape. The investments in Insurtech this year is similar to what was seen last year despite the slow market. Companies are striving to accentuate their digital transformation efforts and seek Insurtechs that can help accelerate virtual interactions in sales and claims while reducing expenses. 

 

References- 

https://www.carriermanagement.com/features/2020/05/18/206778.htm 

https://www.thebalancesmb.com/what-is-insurtech-4584490 

https://www.futuremind.com/blog/insurtech-technology-trends-shaping-insurance 

https://www.investopedia.com/terms/i/insurtech.asp 

https://www.pwc.com/gx/en/industries/financial-services/fintech-survey/insurtech.html 

https://www2.deloitte.com/us/en/pages/financial-services/articles/fintech-insurtech-investment-trends.html 

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