What Is Insurtech?
Insurtech refers to the use of technology innovations designed to find cost savings and efficiency from the current insurance industry model. Insurtech is a combination of the words “insurance” and “technology,” inspired by the term fintech.
Understanding Insurtech
Insurtech is premised on the belief that the insurance industry is ripe for innovation and disruption.
Insurtech is exploring avenues that large insurance firms have less incentive to exploit, such as offering ultra-customized policies, social insurance, and using new streams of data from Internet-enabled devices to dynamically price premiums according to observed behavior.
Regarding traditional insurance, some people pay more than they should be based on the basic level of data used to group people. Among other things, insurtech is looking to tackle this data and analysis issue head-on.
Using inputs from all manners of devices, including geolocation tracking of cars to the activity trackers on our wrists, these companies are building more finely delineated groupings of risk, allowing products to be priced more competitively.
In addition to better pricing models, insurtech startups are testing the waters on a host of potential game-changers. These include using deep learning trained artificial intelligence (AI) to handle the tasks of brokers and find the right mix of policies to complete an individual’s coverage.
There is also interest in the use of apps to pull disparate policies into one platform for management and monitoring, creating on-demand insurance for micro-events like borrowing a friend’s car, and the adoption of the peer-to-peer model to both create customized group coverage and incentivize positive choices through group rebates.
What Insurance Areas Does Insurtech Solve?
Claims Management
The claims management process traditionally resulted in manually reviewing each claim, deciding what compensation to award, then remitting that compensation. Now, insurtech companies aim to build processes that automate certain processes and detect fraud.
Larger companies can leverage technology to gather and aggregate specific data points regarding specific claims. These claims may also be validated using automation by comparing different data streams.
Last, large companies can use automation or repetitive workflows to pay out a large number of claims with minimal human intervention.
Innovations Driving Insurtech Change
There continues to be a growing, evolving range of technology used in insurtech that changes the way insurance is being performed. Here are the following most notable technologies being leveraged.
