What Is InsurTech? | Lion.io
What is insurTech? Overview
InsurTech can be described as the innovative use of technology in insurance and is a subset of FinTech, or financial technology. Just like FinTech, insurTech has a broad range of applications that need to be looked at individually.
InsurTech companies come into the insurance industry to serve a new market of young Millennials and Gen Zs who are digitally savvy, and they prefer to Google for answers than to contact a financial advisor.
Deloitte estimates InsurTech startups have attracted $16.5 billion in investments over the past decade. This is an indication that we are still yet to see new Insurtech business models being developed in the coming decade.
Insurtech is affecting the entire value chain of the insurance industry,- from distribution and marketing, product design, underwriting, claims management and balance sheet management and across all lines of insurance — property and casualty, life and health. Technology has made all these things possible and because insurance plays an important role for all businesses and for individuals lives.
How does InsurTech Work?
When we look at the applications of insurTech, we can agree that insurTech applications are constantly changing. However,what remains is the fact that insurTech will resolve issues relating to,but not limited to enhanced backend processes, improving the customer’s experience, helping insurers and the insured to prevent fraud and money laundering which will in turn save companies a lot of money.
Insurtech startups develop products that customers will enjoy using. And by using chatbots and Machine Learning, customers can have their issues resolved within a short period of time which in return will help companies cut down on hiring customer service employees and getting more positive reviews
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Through the use of smartphones, customers can use their phones to submit claims. This will help companies to cut down on using paper and reduce the time it takes to approve a claim. Customers can simply take a picture and submit their claim.
Applications For InsurTech
We know that insurTech has been around for over a decade already, however many insurers are reluctant to adopt the technology and this is because the industry has a lot of regulations and a lot of jurisdictional hiccups that new startups must go through. However, this does not stop new players from innovating new ways to provide insurance to clients even if they have to collaborate with willing incumbents, who want to change how they approach their business. Application for insurTech can be looked through the lens of distribution and marketing, product design, underwriting, claims management and balance sheet management.
Distribution and Marketing
InsurTtech startups need to develop a marketing strategy and a distribution network that will ensure that they reach their maximum potential. Already most insurtechs utilize direct distribution channels like websites, social media, and e-commerce are just some of the well known channels for distribution startups are using. In this way, they are able to meet their tech-savvy clients.
Product Development and UX/UI
Product development and design are also an important driver for innovation in the insurance industry. Since customers are tech savvy, it means that customers are looking for insurance providers who will be able to focus ensuring that they have a seamless experience when they are using their products. Customer centricity, speed and flexibility are a necessity in the insurance product development process.
Companies like Amazon and Netflix have raised the bar for terms of customer experience for products and services that are fast, convenient, and personalized, the insurer of the future will definitely have to follow suit, to be able to serve the customers of the future.
According to a report from Deloitte, new market realities demand changes in the product development, many customers expect service anywhere, at any time, using any channel. They are also looking for products that can be activated and deactivated at any time necessary. These are some key considerations for insurers looking to modernize their products and business.
Underwriting and Risk Assessment
Traditional underwriting and risk assessing generally make decisions on insurance premium according to average questions about age, family, health conditions, family composition and compensation.
However this approach cannot compete with the sophisticated tech solutions. Cloud computing, Machine Learning(AI), Internet of Things(IoT) and Blockchain are already changing the roles of actuaries and underwriters in the sector.
Cloud-based risk assessment could help in the effectiveness of the underwriting process as it helps underwriters to analyze applications and verify them against the existing the risk assessment and policy issuing criteria points out areas of exceptional concern, automatically approve applications that meet at underwriting criteria, and suggesting new underwriting criteria based of data from declined policies and policies that have issues.
Claims Management
Having an efficient claims management system gives insurers a competitive edge over their competitors because people are able to get their claims when they need it. This is one area that makes insurtechs a more favourable option for all millennials and gen Zs. Today’s marketplace prioritizes speed and efficiency and traditional insurers are still unable to cater for the needs of this new marketplace of tech savvy customers. Insurtech companies are customer centric and are always looking for new ways to ensure that they use cutting edge tech to provide for their customers.
Key Takeaways
We need to prepare for a future where tech like IoT and automation will help insurers and the insured to get value for their money because with more data we can make better informed decisions and risk can be minimised. Traditional insurance companies will have to consider that customers today are looking for more interactive and simple processes for them to get insured. When they develop products that can serve that increasing market, they will remain relevant to young and tech savvy customers who are looking for fast and efficient services.
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