Sure about insuretechFollowing in the footsteps of the Fintech revolution, the insurers are stepping up their game with AI, big data and high level analytics to help themselves and consumers. Startups and old insurers alike are getting in on it.
3 min read
We’ve all heard of ‘Fintech’, the collective noun used to identify a new generation of financial services businesses including the new online-only banks. But coming up close behind is another industry that is being transformed by technology: insurance in the form of ‘insurtech’, making use of technology innovations designed to make the current insurance model more efficient.
Insurtech, short for ‘insurance technology,’ refers to the use of technology to innovate and optimise the insurance industry. Insurtech companies leverage advancements in artificial intelligence, big data analytics, blockchain, machine learning, and other technological tools to disrupt traditional insurance models, enhance customer experience, streamline operations, and create new business models.
There’s even a trade association representing Insurtech, Insurtech UK, with a stated mission that is to be “transforming the insurance industry through the use of technology and making the UK the global leader for insurance innovation”.
A ‘Principle Partner’ in Insurtech UK is McKinsey who have produced a report on the success of Insurtech in which the key takeaways are:
- The UK is a global insurtech leader, with London boasting the same number of Insurtech ‘unicorns’ as the rest of Europe combined, and second only to Silicon Valley globally
- Insurtechs contribute almost £5 billion to the UK economy and support 60,000 diverse, young, and highly qualified jobs across all of the UK
- Of the estimated 3,000 Insurtech firms in the world, approximately 280 are located in the UK - the highest number of Insurtechs per capita among all major world economies.
Key aspects of insurtech:
- Technology integration: Insurtech companies utilise technology to modernise various aspects of the insurance value chain, including underwriting, policy management, claims processing, and customer service
- Data analytics and AI: Insurtech firms employ data analytics and artificial intelligence to assess risk more accurately, personalise insurance products, predict customer behaviour, and prevent fraud
- Customer-centric approach: Insurtech emphasises creating a seamless and user-friendly experience for customers through digital platforms, mobile apps, and online portals for purchasing policies, managing claims, and accessing information
- Peer-to-peer insurance: Some insurtech companies enable a peer-to-peer insurance model, where groups of individuals with similar risks pool their premiums and pay claims for each other, often facilitated through blockchain technology
- Usage-based insurance: Insurtech has popularised usage-based insurance, which adjusts premiums based on actual usage or behaviour, such as driving habits in the case of auto insurance or health data for health insurance
- Blockchain for trust and transparency: Blockchain technology is used to enhance transparency, security, and efficiency in managing policies, claims, and contracts, reducing fraud and providing a reliable record of transactions
- Microinsurance and on-demand policies: Insurtech enables the creation and distribution of microinsurance products, catering to specific and often smaller coverage needs. Additionally, it allows for on-demand or pay-as-you-go insurance policies
- Insurtech startups and collaboration: The landscape is heavily populated by startups that challenge traditional insurance companies. However, many traditional insurers also collaborate or invest in insurtech startups to adopt new technologies and stay competitive
- Risk assessment and management: Insurtech companies use advanced algorithms and data analysis to improve risk assessment, enabling more accurate pricing of policies and better risk management
- Digital claims processing: Streamlining claims processing through digital means, such as AI-powered claims assessment and automated settlements, improves efficiency and reduces the time taken to settle claims.
Insurtech is continually evolving, shaping the insurance industry's future by fostering innovation, increasing efficiency, and enhancing the customer experience. It's likely to remain a significant force, driving changes in the way insurance products are designed, distributed, and utilised.
Rightly Save is part of it
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