Insurtech: what it is, examples and how to seize opportunities
The Insurtech concept is transforming the insurance industry with new technologies to improve the customer experience, simplify policy management and increase competition.
Notice the term “transformation”: that’s right, the Insurtechs – startups that work within this concept – are revitalizing a well-established industry to make it even more vibrant, sustainable and agile.
Keep reading to understand what Insurtechs are, why you should pay attention to this movement and more!
What is Insurtech?
The term Insurtech comes from the combination of Insurance and Technology. It refers both to startups who act in this way and to the phenomenon behind the concept.
We can say that Insurtech is a subset of Fintech: technology is behind the creation, distribution and administration of the insurance business. Apps for smartphones, wearables, accident processing tools, online policy handling and automated processing are all synonymous with Insurtech.
Quite in line with what we already know from the Digital Transformation concept, the Insurtech phenomenon is grounded by Big Data, Artificial Intelligence (AI) and the Internet of Things (IoT) – most of the capital invested goes into these areas.
In practice, it is a major key turnaround of the insurance industry in terms of business model. The Insurtech practice is useful for collecting and analyzing customer data to provide a better and more accessible service.
If a woman is leaving for a backpacking trip to the Brazilian northeastern, she wants her insurance with just a few clicks on her smartphone, instead of searching various forms on the web or, worse yet, ordering by the phone.
Someone traveling at a short distance for two days deserves much cheaper insurance than someone on a week-long skydiving trip in the Chilean Alps, doesn’t he? Startups can start offering insurance for only an hour for someone to borrow a friend’s car. That’s Insurtech too.
The most visible examples of Insurtech come from the world of personal insurance:
- monitoring devices in the car;
- wearable activity trackers;
- customer-facing applications;
- SaaS platforms that manage insurance and payment coverage.
In these examples, we see insurers leveraging better data and customer experience to improve their insurance coverage and make more accurate predictions about the risks.
In the world of small business insurance, for example, Insurtech works behind the scenes to increase the options that business owners have, keep costs down and speed delivery of insurance coverage.
Twenty years ago, it was difficult for a new business to find insurance. They would have to schedule a meeting with a broker and ultimately they might find out that the agent’s operator had no cover option to suit their business.
Why you should pay attention to the Insurtech movement
Experts point out that the so-called “Insurtech movement” will force the insurance industry to intensify its game in terms of customer service and offerings. It will no longer be a case of doing things as they have always been done.
The challenge is to ensure that Insurtech is attractive to consumers. That means delivering personalized products rather than a one-size-fits-all. Customers also want their insurance products to be delivered through mobile devices.
There is a polarization in Insurtech between the use of technology by representatives to adapt their existing service offering to a changing market and disruptive startups seeking market share. The common link, therefore, is the consumer; he will choose between established and challenging players (the dynamic startups) – or, more and more likely: he will use a mix of both.
In short, the most tuned and prepared insurance companies to this transformation are investing in startups – which make it easier to take advantage of the “Insurtech phenomenon” – to drive innovation. They see this initiative as an opportunity rather than a threat.
→ Also read: Open Insurance: what is it and how does it work?
Partnership opportunities between insurers and Insurtechs
Having said all that, should insurers feel threatened by the “Insurtech phenomenon”? Definitely not! There are numerous opportunities for partnerships between traditional companies and Insurtechs startups.
In a world where digital is already mainstream, financial institutions and insurers have already realized that they should invest in menus of digital services, mobiles, omnichannel, as well as agile methodologies, user-centric/people-first strategies and Data Science.
Signing partnerships with startups that operate within the Insurtech concept is therefore to ensure an upgrade in business models; rely on highly skilled technical teams to make the process of creating insurance products – and their sale – much easier, faster and more efficient.
Thus, insurers can take advantage of Artificial Intelligence technology to, for example, provide a personalized service for their consumers – quickly summarize and present the most relevant and useful products, much faster than a human.
With the Internet of Things, you can get detailed information about your stakeholders, develop and deliver the right products at the right time. Tailored driver insurance can be based on data submitted directly by vehicles – the most responsible drivers can benefit from a discount, which helps drive sales.
This all combined with reputation gain, increased innovation, reducing bureaucracy and costs (you can automate almost all, if not all, cases), expansion of the territory of activity (sales and online services to geographic regions impossible to face-to-face), among other advantages.
Finally, check out a list with examples of Insurtechs that are already driving innovation in the insurance industry in Brazil.
Kakau is an insurance platform without franchise; 100% digital, which enables customers to contract and cancel products and make payments through the app.
The startup says its goal is “to lead, through technology, the financial inclusion of the Brazilian population that lacks knowledge of how important insurance can be for their day-to-day life.”
Kakau uses Artificial Intelligence to, in case of loss, support users via mobile devices with maximum accuracy and speed.
Minuto Seguros emerges as one of the largest insurers in the country that unite on and offline. The company recently received investments from a Silicon Valley fund, Redpoint e.ventures.
The startup says it “wants to make life easier for those who seek insurance, always thinking about the quality and importance of human service.”
Segurize is an online platform that indicates products and services offered by Segurize Corretora de Seguros.
In addition to reducing the insurance industry bureaucracy, it generates extra income/bonus to customers who indicate the platform to friends and acquaintances.
Bidu is an online insurance broker, which has an integrated platform with major insurers. It is well known for delivering insurance proposals within seconds.
Youse is an online insurance sales platform.
Startup guarantees that quotation, personalization and contracting are processes performed 100% online, via any device. And if you need help, the customer can count on the support team available full time from Monday to Monday via telephone. “We talk as equals, no blah-blah-blah and in a way that everyone understands.”
As you have seen throughout the text, the phenomenon Insurtech has come to stay and has already provoked profound changes in the insurance industry, in Brazil and worldwide.
Create a partnership strategy with specialized startups in this subject and update the business model is recommended by ten out of ten experts. Not putting this on the agenda can be a fatal mistake in a very short time.
To learn more, industry: MJV Trends 2019 – Technological Innovations in Insurance.