Insurtech combines 'insurance' and 'technology' and describes new products and companies that use disruptive technology to change the way customers buy insurance. It is a relatively new concept in the insurance industry where businesses compete with traditional insurance to develop innovative products that use data to make insurance affordable, accessible, and easy to understand.
Insurtech startups use technology, such as artificial intelligence, to develop applications accessible from tablets, laptops, and iPhones to give customers better options when purchasing insurance plans. Insurtech uses a range of technology to make the insurance buying process more accessible and less expensive than the traditional methods. Insurtech allows customers to purchase insurance tailored to their individual histories and needs, creating a competitive advantage over traditional businesses that price policies based on a customer's risk category.
For example, insurtech startups can offer insurance suited to the customer's needs instead of sorting individuals into board groups based on risk assessments. The products created by insurtech use big data and AI to make the buying process more efficient, often gathering data from social media platforms to create customer profiles. These profiles provide information to insurtech businesses for creating specialized groups, where pricing is deduced based on a customer's health data, finances, and lifestyle.
The technology used to create insurtech products can include – lifestyle data from wearables, apps, AI, blockchain, and the Internet of Things (IoT). By using technology to create new platforms for customers to access, insurtech is helping disrupt time-consuming processing times, complicated paperwork, and overpaying for coverage.
Insurtech allows customers to assess efficiently, manage, and adopt insurance plans better aligned to cover real day-to-day risks. Customers will be better able to plan finances, knowing that the insurance they pay will closely align with lifestyle choices that can be analyzed using historical data from IoT streams. Data analytics can help insurers create policies that calculate health risks individually, rewarding better health profiles with lower premiums.
Data accessed from remote health monitoring tools can help reduce healthcare costs, assisting people to pay for highly personalized coverage to fit current health needs. Health services have become more adaptable, and preventative care can be tailored to data that forecasts the onset of chronic illness or disease.
Easy access to insurance on phone apps gives customers the flexibility to decide on a plan while receiving package details, bullet-point summaries, and easy-to-understand liability information.
Insurance plans – like car, property, life, and health - will become competitively priced. Insurtech allows customers to pay for policies designed based on personal criteria, reducing costs associated with big risk categories. Customers who use apps to shop for insurance – like for best-suited healthcare plans - can get tailored policies quickly without burdensome paperwork. Most insurtech apps have chatbots to help streamline the buying process, simplify the inquiry process, and save money on customer service.
Data gathered from apps will provide:
Insurtech makes asset management, pricing risks, and claims more efficient by allowing customers to use digital signatures on easily accessible forms from their mobiles or laptops. With the help of AI and machine learning tools, complicated policies can be pieced together into one insurance product and quickly reviewed, approved, and signed with clickable links and online consent forms.
Insurtech startups that use machine learning applications can extract data at an accelerated pace and create insights that can be used to build models that analyze risk, fraud, and future demand. Claim reporting is also streamlined with the help of automation, as is the underwriting process. Processing data and verifying customer information become intuitive, allowing customers to purchase a policy quickly without stepping into an office.
Telemetry-based products, the recording and transmitting data from remote sources procure data from cars, homes, and health wearables, allowing insurtech companies to price insurance and file claims based on real-time data. Insurtech uses this data to help customers get the best deals on policies. Individual prices are based on insights that can accurately predict what type of insurance policy matches the customer's needs.
A common setback for insurtech startups is the concern with data leaks and privacy, increasing the need for additional security. The use of Blockchain enhances security by tracking financial data records, storing financial information with smart contracts, and detecting suspicious behavior that can lead to identity theft.