The term “Artificial Intelligence” is likely to elicit a vague dreamlike sequence of a future for many of us. For some, it is the vision of a utopia, while for others, the perception is more dystopian. No matter what abstract views we take into account, the truth lies in the fact that artificial intelligence is slowly and steadily becoming a reality. Look around you. From a simple Google search to your Netflix recommendations, artificial intelligence has permeated your life at every level – for better or worse.
Insurance is one of the many areas in which technology is catching up at an exceptional speed. The outdated processes of the industry make it ripe for innovation and disruption. However, the latest ways of doing business in the digital age are difficult to follow due to strict regulatory agencies and enforcement requirements. The industry is ripe for disruption and innovation. However, existing laws make innovative ways of doing business impossible to use. The crux of the matter is that many insurance companies and policyholders aren’t even aware of the advances made by Insurtech.
What is Insurtech?
If you think that insurtech is a new jargon, you cannot be much farther from the truth. The origin of insuretech can be traced to 2010. The definition of Insurtech (also known as Insuretech) reflects the insurance industry’s contribution to innovation and the advancement of new products and services. In other words, the application of cutting-edge technology to the expansion and optimization of the entire insurance industry’s business model. Insurtech expands on what Fintech began by applying it to the insurance sector from an expert and concentrated viewpoint. Insurtech is a combination of the English terms insurance and technology, a product of the convergence of digitization, disruptive innovation techniques, and the insurance industry. In recent years, and due to the strong emphasis on Fintech, the insurance industry, which is closely linked to banking and finance, has agreed to follow this sector on its journey to modernize, digitize, and expand by leveraging new technologies.
The recent introduction of advanced techniques such as artificial intelligence, machine learning, and big data to the insurance industry has developed revolutionary insurance products improving Insurtech.
What is the ecosystem of Insurtech?
Insurtech has been designed and organized in various ways due to the insurance industry’s complexities and diversity. Insurtech organizations and businesses have emerged and developed from a variety of viewpoints.
As a result, we can describe and structure the Insurtech ecosystem into two distinct categories:
- Sectors: Insuretech ecosystem can be divided and treated in a sectorized manner based on the form of insurance service provided, while keeping in mind that it integrates all of the complexities, methodologies, and characteristics of Insurtech: Customer service, customers, sites, marketplaces, and those classified by conventional goods that have been converted: eHealth, Senior, Items, Travel, Home, Life / Savings, and Burial.
- Aggregate: This approach to the Insuretech ecosystem recognizes its complexities from an organizational standpoint, segmenting the sector based on the role of the various Insurtech companies: Product distribution insurance, Insuretech technology providers (Value chain, protection, big data, Risk & Fraud, customer experience), broad digitized insurance companies, and innovative startup insurance companies.
As a result, it has created a sector that, with the help of Fintech, has been able to structure itself to develop, expand, and digitize.
Why Insurtech is the future
Many of the needs of the insurance industry are met by the banking and financial sectors. Beyond the emergence of previously unimaginable products, one of the most distinctive Insurtech advancements, shared with FintechFintech, has been the reinvention of the customer onboarding method. Identification technology was already being used as a disruptive approach to user registration needs in Fintech’s KYC (Know Your Customer) processes. The conversion of this method to the digital realm resulted in eKYC (electronic Know Your Customer). As a result of incorporating video recognition into its operations, the insurance industry has gained the following advantages:
- Comply with the most stringent regulations regarding technological and legal security when bringing new clients in-person and online.
- Lowering customer acquisition costs
- Improve user experience by automating consumer acquisition
- Willingness to grow a company internationally and without concern for boundaries
- Provide goods, facilities, contracts, and different procedures remotely and online
- Improving security controls and detecting fraud
A handshake between Fintech and Insurtech
An increasing number of Fintech companies are extending their core products by “bundling” various financial services products in their portfolio. Partnerships with insurtechs are one of them. Both parties often find the value proposition appealing. Fintech businesses can use insurtech alliances to boost sales and provide their consumers with added value. These alliances will provide insurtech with a broad and committed user base for sale. Some of the biggest insurtech companies have a lower user base when compared to various fintech companies.
Way.com in the age of Insuretech (H1)
The insurance industry, long regarded as a conventional industry, is experiencing significant innovation and disruption with the advent of Insurtech. InsurTech differs from other types of market disruption. Rather than a fierce rivalry between industry incumbents and upstart entrepreneurs, there is a level of collaboration and cooperation between the two.
So, what is the future of insurance? How does the insurance industry better leverage InsurTech and push into new risk territory? Simple. Collaboration can also lead to radical innovation.
Leaders insurance companies should always ask themselves and their teams: How fast can we develop? Do we have the ability to create and implement innovation? And should we look to collaborate with a company rather than compete?
There have been numerous collaborations between behemoth insurance companies and startups. Aviva partnered with startup Digital Risks in 2016 to create a brokerage dedicated to providing case-specific, monthly insurance subscriptions to startups and SMEs.
The true transformation of industries will happen as we reimagine risk altogether, exploring the synergies between evolving societies and technology.