All about InsurTechs

Technology has burst into the insurance sector with strength. We are now talking about Insurance Technologies or Insurtechs. Surely you have heard of it without perhaps knowing what this concept refers to. The truth is that technological innovation in the insurance industry is something that each of us faces.

Insurtechs result from a mix of the arrival of millennials, technological developments, the need to insure new concepts such as the Internet of Things and the emergence of different economic models such as sharing economy.

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???? What is Insurtech?

Word " Insurtechis the acronym of two English words: insurance and technology. Insurtechs can be defined as the fintech branch who is dedicated to the world of insurance.

In other words, we refer to technological innovation in the world of insurance. Thus, we speak of startups or insurtech companies, when several insurance companies that use technology to develop their business have come together.

According to Investopedia, the insurtech explores options that large insurance companies have less incentive to pursue. These are offers of ultra-custom fonts, social security and the use of new data streams from devices.

In addition to better pricing models, new insurtech companies are using artificial intelligence. This is in particular the deep learning to manage brokers' tasks and find the right mix of policies to provide a comprehensive insurance policy.

Among the other cases potential uses of Insurtech, include the creation of on-demand insurance schemes for micro-events.

As micro-events, we have the temporary use of a borrowed car or the purchase of health insurance for a short period. And the adoption of a personalized group coverage model with group discounts.

???? How do Insurtechs work?

Since insurtech is new by definition, its applications are constantly evolving. Generally, Insurtechs streamline and improve backend processes. It also improves the customer experience and saves the insurance company money.

The chatbots and smartphone apps are examples of how insurtech is streamlining the backend process.

The insurance companies no longer need Hire customer service employees to respond to customer concerns. Many can be answered by chatbots that automatically respond to requests day and night.

Smartphone apps also enhance the customer experience. Instead of having to print photocopies of licenses and other documents, a customer can simply take a picture with their phone and submit it through the app.

This saves time and resources for both the customer and the company.

???? Types of Insurtech

Here are some of the common types of insurtech you might expect to see used by an insurance company.

Some of these technologies will eventually be superseded by newer technology, while others will evolve and remain an important aspect of Insurtech.

🎯 Artificial intelligence

The term artificial intelligence refers to software capable of performing functions normally associated with humans, such as reasoning and learning.

Sculpins, which are essentially computer programs, can communicate with customers verbally or by text. This is one of the examples of technological insurance.

🎯 machine learning

Another type of insurtech is machine learning, which is a subcategory of Artificial Intelligence. As its name suggests, machine learning is a technology that allows machines to to learn " over time. 

It uses algorithms to mimic neural networks in the human brain. Machine learning allows computers to acquire knowledge by extracting patterns from raw data rather than following specific instructions.

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Insurance companies collect large amounts of data, but companies without Insurtech only use 10% of this data.

Machine learning enables insurers to leverage their data more efficiently and extract valuable insights. Here are some applications of Assurtechs

• Risk modeling : analysis of claims data to predict the risk of future losses
• Demand modeling : use of mathematical models to estimate premiums and predict future product demand
• Detect Fraud : identify patterns of fraudulent behavior with machine learning that are not obvious to human fitters
• Claims processing : automation of complaint reporting and processing
• Subscription : Using machine learning to help underwriters analyze data collected from applicants, flag errors and verify accuracy.

🎯 The Internet of Things

Another type of Insurtech is the Internet of Things. This term refers to ordinary machines (like refrigerators and televisions) that are connected to the Internet.

An example of IoT is telematics, the use of electronic devices in vehicles to collect, receive, store and transmit data over a network.

🎯 Smartphone apps

Smartphone apps in insurtech can be designed for customers, businesses, or both. These applications of insurance companies have simplified the insurance process for people on both sides of the transaction.

🎯 Drones

Some insurers use drones, including property insurers. Drones can inspect a property when it would be dangerous to send humans to inspect, such as rooftops and disaster areas.

P&C insurers might also find use for drones, such as inspecting and photographing a car accident site. This technology can also help make your workplace safer.

???? Classification of Insurtechs

An initial classification of Insurtech could be made according to the regulatory framework that governs them. There are four groups of insurtech:

• Companies that have the approval of the sector regulator, because they perform the activities that require it. This may include insurers, insurance brokers, underwriting agencies, etc.
• Companies currently in a gray area, although they cannot fit into any existing legal arrangement. They carry out activities that would require appropriate regulation.
• Support technology companies that, although they belong to the insurance sector, offer complementary activities which should therefore not be considered as regulated entities. Here, for example, there are insurance software or infrastructure providers.
• Companies that operate in several sectors both and insurance is not necessarily their main business activity. An example could be a company that provides a digital identification service.

The previous classification allows us to understand the heterogeneity of the Insurtech universe and the challenges it poses in the future. Some of the new services they offer are adapted to the new needs of urban transport (bicycles and scooters) or drone management.

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The notion of the civil liability of these companies with regard to our activities on the network has also begun to develop. Thus, it begins to provide coverage against cyberattacks on our electronic devices.

There are other Insurtech groups, which specialize in bringing together information about different insurers on one website. This allows the user to save and select the insurance that best suits their needs.

???? Insurtechs: the main advantages

• Personalized higher levels of customization. Thanks to technologies such as big data, insurers can offer personalized services to the user. The ability to collect and analyze large volumes of data makes it easier to tailor services to different consumer profiles, resulting in more efficient customer service.
• Ease and speed. Another advantage is the possibility of offering a 100% online service to consumers. In this way, consumers benefit from tighter prices and fewer intermediaries.
• Better risk analysis. From now on, insurers will be able to offer a much more precise service to each client. Avoid users having to pay for a high-risk estimate, derived from a lack of information.

????The main limits of Insuretchs

Despite the benefits we have seen, there are some risks we need to consider when using these types of services.

• We can provide insurers with information about our health and associated risks without our knowledge.
• All of this companies can integrate software tracking and use the data obtained to serve us advertising. Be especially careful with large tech companies entering this industry.
• As any other aspect of the Internet, we must take extreme cybersecurity precautions and adopt good digital practices to prevent our personal data or profiles from falling into the hands of third parties.

🌿 Summary ...

• Insurtechs are all companies that use technology to offer personalized insurance services to their customers. They aim to improve user experiences
• Insurtech is any technology used by insurance companies to streamline their operations, provide better service, or save money.
• Common examples of insurtech include chatbots and smartphone apps.
• Insurtech is a big company – over $16,5 billions of funding were disbursed to insurtech startups between 2010 and 2019.
• Insurance companies keep sensitive information about their customers, so privacy and data security are paramount to insurtech.

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