The insurance industry now includes a number of technology-driven (InsurTech) start-ups that are seeking to deliver more customer-centric insurance products and services in more efficient ways. Approximately 1,500 InsurTech start-ups are currently operating around the world. Additionally, more than $9 billion in disclosed capital has been committed to over 700 InsurTech investments over the past five years.
WHAT IS INSURTECH?
InsurTech can be described as “an insurance company, intermediary, or insurance value chain segment specialist that utilizes technology to either compete or provide valued-added benefits to the insurance industry
There are a variety of actors involved in the InsurTech space, but incumbents are increasingly becoming the driving force behind InsurTech’s growth and development. Investment from incumbent stakeholders has largely flowed towards platforms acting as brokers, agents, or technology solution providers themselves vs. investment in full-stack digital insurers that seek to unseat incumbent carriers. The InsurTech ecosystem is much more focused on collaboration compared to outright competition with incumbent stakeholders operating along the insurance value chain.
Adoption of technology based or bought insurance is expected to increase dramatically, as InsurTech’s look poised to hit the mainstream. The past few years of heavy venture investment in insures has brought a huge array of tools to market that are solving palpable insurance business problems and providing quick and significant returns.
Early technologies tended to put distance between insurers from their policyholders. Phone auto attendants droning “Press one to talk to Sales” and voicemail that never seemed to get a return call. Artificial intelligence tools enhance and support the human connection and personal guidance that is core to the industry.
Customer service and sales departments appreciate the AI tools that help locate answers, take care of details and make sure workflows are as efficient as possible for the customer as well as the staff. This lets them focus on outstanding customer service instead of regulations, requirements and databases.
This smartphone ecosystem dovetails perfectly with AI tools that give consumers what they want and how they want it, thereby improving the customer experience. A new twist has emerged with the ubiquity of smartphones -- the preference for texting, chatting and messaging over calling customer service for assistance Machine learning and natural language processing have found instant traction from carriers to agencies, despite some solutions being in the early stages of development.
Most well-known of this set of tools are the customer-facing virtual insurance agents that have arrived in hundreds of varieties. They are able to take care of insurance claims, handle questions about billing, take payments and churn out quotes by the thousands. Connecting with the target market using approachable, human-like automation is helping insurers stand out to current and prospective customers.
Chinese and Babylonian insurance from thousands of years ago distributed risk and trust to facilitate commerce and the advancement of society. Blockchain continues this tradition. Digital transformation increases the speed and complexity of the insurance business, so there is a growing need for certainty, trust and automation in insurance transactions. With demanding regulatory compliance requirements, evolving fraud detection and mitigation needs, swelling numbers of third-party payments to make and a complex network of data sources, insurers can no longer work with manual processes and non-integrated systems. Blockchain promises trust and reliability among the market participants without the need to integrate with each and every system.
As insurers gain more experience with a variety of technology offerings, they will discover the depth of transformation they can achieve. Machine learning methods applied to the volumes of data available to insurers make advanced analytics and business intelligence within reach to even small agencies. They can affordably track product performance, predict loss and fraud, offer products that make sense with AI automation and blockchain-enabled trust mechanisms and even work on designing new products for risks emerging during the current digital transformation. Advancements in AI, smartphones and blockchain unlock previously hidden business growth opportunities.