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Print Posted on 09/15/2017 in InsurTech

What is InsurTech?

What is InsurTech?

The term insurtech is coined from the words insurance and technology. It refers to several segments of the new technologies that are disrupting the insurance sector through smartphone apps, claim acceleration tools, consumer activity wearables, individual consumer risk development systems, automated compliance processing and online policy handling.

The central feature of insurtech is its application of technology in solving the problems in the insurance industry. Currently, the insurance industry is at a pivotal point where innovation and application of technology are impacting on the age-old industry. 

Smaller insurance companies have been more receptive to insurance technology compared to their large counterparts that are rather reluctant to embrace it. The large firms have no incentive to wade through the unknown which would require them to make substantial investments to align their infrastructure to suit insurtech models

Insurtech is proving to have the potential to make insurance a win-win situation for the insured, the insurer and the partners who make insurance possible. This has been demonstrated through the flexibility and efficiency brought about by the application of smart contracts, social insurance, ultra-customized policies and the use of data from internet enabled handsets (IoT) to price premiums in accordance with observed behaviour. 

While insurtech may be quite bold, many people both in and out of the industry may never see it because these technologies are mostly implemented behind the scenes and processes run alongside the traditional models. Today, the most noticeable elements of insurtech are seen in personal insurance lines like wearable activity trackers, vehicle tracking devices, online software and mobile applications. Essentially, these are data driven technologies allowing more accurate risk predictions, reducing costs, offering better customer experience and speeding up the delivery of insurance coverage. 

Although insurtech has been trying to simplify insurance, the insurance industry is still rather complex. The industry is slow in adopting the opportunities presented by insurtech mainly because of the many regulations. Insurance companies have to comply with various laws and regulations. Additionally, the old school mentality that has dominated the industry makes players less willing to adopt new technologies. 

Insurtech came into the market quite late mainly because of the numerous government regulations in the market and the costs of switching to new technologies. Fortunately, the continued growth of the insurable market provided an incentive to entrepreneurs to begin thinking about innovative insurance products particularly for health insurance industry. The rest of the industries then began to follow suit. It was not until around 2011 that insurtech gained considerable traction. By this time, there were 45 investors who made a total of $131 million in growth capital investment. 

Today, Insurtech  is a multi-billion sector poised to disrupt or empower the incumbents. Global investments continue to grow at a satisfactory rate. 

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