What is Insurtech?
As we saw in our previous article, advancements in technology have been reshaping many industries including the insurance industry. Ever since “insurtech”—the combination of the words insurance and technology—emerged around 2010, insurance companies are going through digital transformation to automate processes and improve operational efficiency. Similar to many other industries, innovation is one of the most prioritized corporate strategies in the insurance sector.
Briefly speaking, insurtech mostly refers to the use of new technologies in insurance value chain. These technologies include mobile apps, smart devices, big data, machine learning, IoT (Internet of Things), AI (artificial intelligence), Robotic Process Automation (RPA) and so on. Insurance companies introduce these new technologies in a wide range of processes to create efficiencies—for example, marketing, underwriting insurance policies, or claims processes. Or sometimes it refers to startups that offer new products using insurtech.
How Insurtech Is Reshaping Insurance
Digital innovations will make the insurance industry more customer-friendly. With smart technology, insurtech solutions aim to reduce errors and increase accuracy to improve performance. As a result, insurers can reduce operational costs, thereby offer more affordable insurance products.
Insurtech not only economizes but also enables insurers to offer more personalized and appropriate profiles for customers. Date collected from customers’ wearables, smart phones and other third-party devices help insurers to optimize underwriting processes as well as claims.
Another positive aspect is that insurance firms can improve their anti-fraud measures by utilizing AI and machine learning. AI can detect suspicious claims that are not otherwise apparent to humans and review the authenticity using big data. Applying variations in the database analysis catches up evolving methods of fraud promptly. Reducing frauds will also optimize pricing, thereby insurers can offer services at a more competitive rates.
What Is the Market Size Today and How Much Will It Grow?
According to the Insurtech Market Report, the market size value of insurtech in 2020 was US$1,462.3 million. The report estimates its revenue will surge up to US$11,940 million in 2027. The estimated compound annual growth rate (CAGR) is 34.4% during 2021 to 2027. Whilst North America is one of the largest contributors, key players mentioned in the report include the UK-based Quantemplate and Neos, India-based Acko General Insurance, and the French-based Shift Technologies.
How Insurtech Companies Are Operating Differently
So, how is insurtech changing the game for the insurance sector? Let’s have a look at some insurtech startups across the world.
BIMA (Founded in 2010, Based in Stockholm, Sweden / London, UK)
BIMA brings mobile-delivered insurance and health services to low-income families across Asia, Africa and Latin America. Utilizing mobile devices, it makes the three time-consuming insurance processes more efficient: registration, payment, and claims.
Kin Insurance (Founded in 2016, Based in Chicago, USA)
Kin Insurance adopts tech-driven approach to provide personalized and affordable home insurance quotes. Instead of using user provided broker-entered data, Kin pulls data from independent third party sources such as satellite imagery and online real estate and government records.
Embroker (Founded in 2015, Based in San Francisco, USA)
Embroker is an intelligent insurance platform that makes it easy for businesses to get tailored insurance at a better price. It focuses on industry-specific coverage for the most complex and inefficient lines of insurance, such as Directors and Officers, Employment Practices Liability, Cyber, and Professional Liability. It uses predictive modeling powered by proprietary technology to fully automate underwriting and make the buying process simple, fast, and more affordable.
Shift Technology (Founded in 2013, Based in Paris, France)
Shift Technology is a provider of AI-driven decision automation and optimization technology for the global insurance business. It analyzes insurance claims across all lines of business using an AI based solution that helps in identifying potential fraud and providing actionable guidance to help claims handlers and investigators make better decisions faster.
FitSense (Founded in 2015, Based in Sydney, Australia)
FitSense uses data collected from wearables for the pricing & selection of risk in health and life insurance. It offers an online platform that leverages data analytics to help insurance companies personalize health and life insurance packages for individuals using smartphones and wearable devices.
The platform aggregates health data across multiple wearable touch points and health tracking applications, and normalizes and combines them to create unique scores for its users. These scores are then used to develop insurance policies to suit individual needs in real time. This in turn helps insurance companies reduce claims and accelerate revenue streams.
More Insurtech Companies Are Expected to Emerge
The COVID-19 pandemic has dramatically impacted the insurance industry. Causing the increased number of claims, it has called attention to the industry’s inefficiencies. With this in mind, more and more insurtech companies are likely to emerge to bring innovative solutions to the old school. In addition to the list above, Asia-based insurtechs such as Surer and CoverGo are also worth watching.
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