FinTech, MarTech, InsureTech? If these words seem like a foreign language to you, you’re not alone. But even if you’re not sure what they mean, chances are you’ve already been involved with at least one of them. First, just so we don’t leave you in the dark, here’s a brief explanation. All of these terms are a hybrid term of an overarching industry and the new sectors within these industries that are opening up thanks to technology.
So What is InsureTech, Anyway?
While smart phones, apps, interconnected devices, and big data have a big impact on our day-to-day, they are showing to have an even bigger influence on how big industries provide services to their customers. Insurance is one of those big industries—whether it’s health insurance, car insurance, home insurance, business insurance, etc.
In the past few years InsureTech has really revolutionized how insurance across all markets is bought, sold and calculated. And it’s booming. In fact, investments in InsureTech rose 148% between 2016 and 2017. Almost one third of insurance customers rely on some form of InsureTech, and that number is rising each year. If you’ve ever called into your insurance company and interacted with an automated voice to accomplish a task (like a pay a bill, make a claim, etc.) or used an app to access or make changes to a policy, you are part of that one third.
InsureTech is allowing insurance providers to improve efficiency, reduce costs, and offer a superior customer experience. They can do this through tools like:
- Chatbots – Artificial intelligence that uses natural voices to field questions or applications of policy holders and new applicants, replacing the need for an actual employee to do the same job (and therefore reducing costs).
- On-demand coverage – Consumers today have a “now” mentality. And when it comes to purchasing insurance, it’s no different. InsureTech is allowing companies to offer tools and platforms for customers to purchase or make changes to their policy with only a few touches on their smartphone or clicks on the computer.
- Internet of Things – Devices like smartphones and wearables (smart watches, fitness trackers, etc.) have very much become a part of our daily lives. These devices are all interconnected with the cloud and produce a huge amount of data that can be analyzed by big industries, including insurance companies. They can use this data to reduce risk, provide more personalized service and offer a better user experience. Take, for example, a car insurance company that discounts rates for customers who utilize a GPS and speed tracker in their vehicle to prove their safe driving habits. Or smoke detectors linked through network for faster, informal settlements.
- Underwriting with Big Data – With the ability to analyze the enormous amount of data insurance companies can gather about customers these days, they’re able to cater rates to an individual and their personal data, rather than a group average or standard.
- Claims processing with Artificial Intelligence (AI) – InsureTech companies are already proving that claims processing can be completed without the need for human involvement. Recently, U.S. InsureTech company Lemonade set a record with completing a claim—from triage to fraud mitigation to payment—in three seconds.
How InsureTech is Changing the Industry
While InsureTech helps companies save costs in a lot of areas, ultimately the benefit of InsureTech is for customers. Cost savings by companies means lower rates, and better technology offers new and better products along with a significantly improved customer experience.
As with any big change in industry, there are those who like it and those who don’t. But one thing is for sure: InsureTech is here to stay.
Insurance companies that will thrive in the future will be those who use InsureTech to enhance their service offerings instead of keeping the status quo as a way of competing with companies moving in a forward direction.