12 Feb WHAT IS INSURTECH & THE FUTURE OF INSURANCE?
Insurtech hits on the idea of the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. It is a portmanteau of “insurance” and “technology,” inspired by the term fintech.
The concept of insurtech leverages modern technologies like the cloud, artificial intelligence, Internet of Things (IoT), blockchain, and advanced analytics to make insurance processes faster, cheaper, and more customer-friendly. It strives to capture new market opportunities and often clashes with traditional insurance practices.
The proliferation of smartphones, social media platforms, and data streams has opened new distribution channels through which to target potential customers with precision marketing. Insurtech firms are using machine learning algorithms to offer usage-based insurance packages with rates based on individual consumer behavior patterns.
For example, auto insurers can now monitor driving data via customers’ mobile phones to set premiums based on factors like mileage, braking habits, and time of travel. That allows for highly customized pricing.
On the claims side, insurtech is automating processes for quicker settlements. Artificial intelligence can rapidly classify, evaluate, and authorize claims by analyzing submitted photos of property damage and medical records. For life and health insurance claims, wearable device data verifies policyholders’ pre-existing conditions and life events.
Blockchain facilitates transparency between insurers and reinsurers to prevent fraud. Smart contracts instantly pay out claims once triggering conditions are met, determined by IoT sensor data feeds.
Insurtech increases back-end efficiency of legacy insurance firms while expanding the boundaries of insurability. With real-time risk monitoring and mitigation via connected devices, insurtech converts modern data streams into actionable insights. That unlocks new revenue potential for the insurance industry.
Typical insurtech firms work to align with and enhance consumer interests while still being profitable. They bring innovations from emerging technology sectors and adapt them to insurance industry-specific compliance standards and use cases. Increased efficiency, expanded market reach, and creation of innovative covers and bundles benefits insurance companies and policyholders alike. Insurtech is rapidly shaping the future of both personal and commercial insurance landscapes moving forward.