InsurTech Delivers Next Level Innovation and Efficiencies For The Insurance Industry
Insurance is a large and growing industry in the U.S. and worldwide. From property and casualty, to business, to health insurance, insurance offers much-needed protection to individuals, businesses, and organizations at all levels. U.S. insurance industry net premiums written totaled $1.2 trillion in 2017, and Insurance carriers and related activities contributed $602.7 billion, or 3.1 percent, to the nation’s gross domestic product (GDP) in 2017, according to the U.S. Bureau of Economic Analysis. As a complex, nuanced, and regulated global industry, insurance leverages technology to operate efficiently.
What Is Insurtech?
Insurtech refers collectively to the new technologies that are transforming the insurance industry, by reducing costs for insurance companies, introducing efficiencies, and improving end-user satisfaction.
Our modern world is driven by data and old school information systems are slowly but surely making the transition to data-driven models. Banking and finance saw a technical overhaul not long ago. Classified as FinTech, the technological side of the world of finance has grown in leaps and bounds. Not to be left out, insurance has taken a big leap forward to leverage online platforms and big data portals to improve all their workflows, from sales through to underwriting. Near real-time and real-time streaming of data, too, helps insurers manage risk better and assists retention and attainment of customers. These technological innovations are referred to as InsurTech, since they are the product of the insurance industry and technology. It improves efficiency, reduces loss and provides visibility of the business through data analytics.
Insurance Sectors That Can Benefit from InsurTech
There are many types of insurance designed to protect against financial loss. Each of the common insurance types have a number of sub-types leading to a wide range of choices for consumers, businesses, and organizations. Some of the most common insurance sectors include:
- Property & Casualty Insurance
- Auto Insurance
- Medical Insurance
- Life Insurance
- Business Owner’s Insurance
- Professional Liability insurance
- Commercial property insurance
All of the above sectors, and more, can potentially benefit from InsurTech solutions. An example of InsurTech in the auto insurance is TrueMotion – a startup that uses smartphones’ sensor technology to score drivers based on their behavior. With the intent of identifying distracted driving, this information helps underwriters focus on the safest, most profitable drivers.
How Insurtech Is Gaining Relevance In The Insurance Industry
Apart from the fact that real-time or near real-time data can be a big boon to insurers, InsurTech is more attractive than old school methods due to its better pricing models. In addition, there are AI modules that are used to help brokers find the appropriate policies for individuals and companies. It paves the way for on-demand insurance and a wider variety of group and individual models to incentivize positive choices.
InsurTech vs FinTech
It is said that InsurTech is the next FinTech. In reality, InsurTech seems all set to surpass FinTech in many ways. The global upsurge of innovation and changes in consumer requirements have made it mandatory for insurance providers to look at ways to expand or adapt their services. For example, with the growth of the Internet of Things (IoT), insurance providers are increasingly understanding the need for change in their handling of risk management (driverless cars being just one example). FinTech began its journey earlier and contributes billions to the banking and capital industries but InsurTech looks set to overtake it. Particularly in terms of how it is driven by and supports global, social and technological change.
What Are The Challenges Faced By Old School Insurance Firms?
With some members of the insurance industry aggressively embracing InsurTech, old school insurance firms will need to step up their pace in order to remain competitive. These insurance firms certainly will benefit by adapting their business models to incorporate technology, but challenges such as assessment and adoption of appropriate, scalable technology, legacy system data migration and/or merging and customising technology will need to be resolved by these firms or they will cease to be competitive.
What Are The Benefits For Insurance Firms Using InsurTech?
InsurTech can greatly boost an insurance company’s efficiency, effectiveness, potential and credibility. Apart from assisting the provision of attractive, customer-centric policies, InsurTech helps insurers to reduce loss and reward customers with improved, adaptive products and lower premiums. By utilizing insurance technology, insurance firms can leverage customer satisfaction/retention, facilitate business growth and manage their businesses more effectively.
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Gary R Markham is a 20+ year veteran of the e-billing, time recording and legal practice management technology (LegalTech) space, and is quoted on Forbes, RIMS, ACC and other platforms. He often speaks and advises clients on managing the finances of their practice, enabling them to focus on the job at hand.