Traditionally staid in its practices, the insurance industry is undergoing rapid upheaval and transformation due to an expanding universe of InsurTech startups. These startups have implemented technology to deliver faster results, customized products tailored from the ground up, or are rethinking how customers engage with their products. This article discusses how Insurtech startups are transforming the insurance industry.
Key Areas of Disruption:
Customer Acquisition & Engagement: Through innovative means of digital strategies, insurtech startups are now reaching virgin customer segments through intuitive online sales platforms besides making the actual insurance buying process much simpler.
Big Data Zoom and its Utilisation for Risk Assessment: InsurTechs use big data coupled with advanced analytics to build more accurate risk models, resulting in individual pricing/covers.
Chatbots with AI (Artificial Intelligence) capabilities Chatbot is another brilliant tool that many InsurTech startups make use of to improve insurance operations by using chatbots that retain human voices and performance ability which SIMILARLY improves the efficiency of Insurance brokers in their day-to-day administrative tasks, making sure the costs are at a minimum.
Development of Insurance Products: In this age, the needs and requirements have changed guess how InsurTechs are; they build new insurance products to cater to modern-day consumers’ demands such as On-demand or Usage-Based Insurance.
Customer Experience: Every InsurTech startup is trying to put customers at the center (be customer-centric), meaning improvement in terms of user-friendly interfaces, mobile-accessible solutions, and overall smoother claims initiation/processing.
Examples of Disruption:
- While this may be replaced by simple online quote comparison tools for many consumers, time is still a factor.
- Unlike traditional one-size-fits-all pricing structures, telematics-based car insurance offers personalized premiums based on driving behavior.
- Claims processing powered by artificial intelligence makes use of a more automated and faster way to process claims that enables the payout much quicker than usual for any customer making it fast and efficient.
- InsurTech start-ups have created offerings – such as microlending and parametric insurance solutions to protect these underserved, often ignored populations.
InsurTech Disruption: A blessing with benefits for all!
Automation and simplified operations -> cost savings for insurers, lower rates for consumers
Enhanced Accessibility: InsurTech solutions have democratized insurance, enabling individuals who might be shut out from traditional offerings to access them (young people like communicating online).
Increased Transparency – data-driven pricing and risk assessment can lead to improved transparency around insurance costs.
Take Away: Easy to use, easily accessible on mobile platforms allows you a better customer experience when they need their insurance the most.
Challenges & Points to consider.
Regulatory environment: InsurTech startups could encounter hurdles in the changing regulatory landscape for fintech companies.
Data Privacy: Using big data gives birth to numerous issues related to the security of sensitive information. Compliance with Data Protection regulations for health care data: InsurTech companies must adhere to very strict rules when it comes to maintaining and processing patient information.
On-Prem Architecture: It can be quite tedious for traditional insurance companies to adopt InsurTech solutions into their legacy frameworks.
Creating brand recognition and consumer trust: InsurTech newcomers must create visibility of their brands among a pool full of established players.
The Future of InsurTech:
InsurTech startups are only just beginning to disrupt the insurance industry. Areas of innovation to watch in 2020
⦁ Artificial Intelligence: will become more entwined in underwriting and claims, it helps insurance to detect fraud.
⦁ Internet of Things (IoT): Data from connected devices can help to risk assess in more granular levels and enable new insurance products.
⦁ Blockchain technology: the potential for secure data handling with blockchain could reshape insurance procedures like claims management or fraud prevention.
Conclusion:
There is no arguing that InsurTech startups are changing the world of insurance. By adopting new ways of thinking and working together, InsurTech companies and traditional insurers can build a modern insurance ecosystem that is more efficient for customers to use this year as well as the next.