Fintech is a common phrase in the finance industry. A new burgeoning sector, Insurtech, is following close on its heels, trying to disrupt the status quo of the established companies. For the uninitiated: Insurtech uses technological advancements to restructure the current car insurance industry to save money and improve efficiency.

The car insurance industry is ripe for disruption because the most established organizations have not yet evolved in how they sell their goods. Insurtech firms attempt to provide ultra-customized policies, social insurance, and dynamic price premiums through innovation and artificial intelligence (AI).

Traditionally, the car insurance industry operates by assigning policy applicants to risk categories using broad actuarial tables, with enough people in similar categories to make the policies lucrative. 

These policies are then signed on a long-term basis, leaving little room for maneuvering.

How can Insurtech be a gamechanger?

Insurtech can be a gamechanger on two fronts. First, a fintech with insurtech technology can look at extensive data and more competitively priced products. This process can be accomplished through artificial intelligence, blockchain, and the internet of things (IoT). Car insurance is based on risk and predicting how big a danger a driver is to the car insurance company. The more data an insurer has on a customer, the more accurate the projection will be. AI can analyze data and situations more quickly, improving accuracy and customizing experiences for customers.

Blockchain technology is inherently secure. As a result, if blockchain is wholly integrated into the insurance business, insurance companies will be able to offer rates for new clients faster than ever before. The old paradigm, in which the corporation must collect data from numerous sources, will become obsolete. Data can be transferred immediately from one side to the other, increasing transparency and reducing human error.

The Internet of Things (IoT) is concerned with linking non-traditional devices to the internet. Insurtech startups utilize this feature to gain access to additional information on potential clients through gadgets such as smartwatches that provide real-time online data.

Let’s move onto the second point. Insurtech offers customers on-demand coverage, allowing clients to buy insurance for their car when they need it. With less than a 20% share of the car insurance market, this on-demand offering is still in its infancy in the United States. However, given millennials’ willingness to purchase usage and on-demand products, it is expected that this offering will become more mainstream once it can meet the needs of the majority of customers.

What is the future of Insurtech in the US?

Depending on Insurtech’s success in the future years, we may see what is expected to happen in Ireland with fintech, namely, significant insurance companies forming alliances. Insurance companies could benefit from insurtech alliances because they will represent themselves as dynamic, connected, and possibly disruptive, allowing them to climb above their existing image.

Furthermore, the opportunity to participate in the adaptation, enhancement, and development of emerging technologies may help recruit and retain employees in the US. When employees have the opportunity to upskill and learn at their speed, they are happier. 

The ongoing learning and growth closely associated with insurtech innovation will be enjoyable to see how the insurtech business evolves and affects the talent market.

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