The success of Finance and technology, known as Fintech, is acknowledged across industries, however Fintech is not the only increasing trend. As technology continuously incorporates itself into the daily insurance service provision, inspiring efficiency and improved service, Insurtech has emerged as a portmanteau of “Insurance” and Technology”. From black boxes in cars measuring driver performance and algorithms in calculating risk profiles of customer to wearables measuring health, Insurtech is predicted to have a great impact on customer experience.
How industry will work?
New insurance companies are looking into possible ways of using technology to assess the risk rating of a client and to monitor them using technology to monitor daily activities of clients.
Despite only 37% of Gen Y reporting that they have positive experiences with their insurance globally, the Insurance sector still contributes over 25% of the UK’s total net worth. With the rise of Big Data, insurance companies are presented with the opportunity to grasp the various platforms to improve their overall efficiency.
According to the FDA, around 1.7 billion smartphone users will be using a mobile medical app by 2018, this is a huge opportunity as environmental sensors connected to devices and wearables, such as FitBits and Apple Watches allow insurers to better manage risk, improve subscriber loyalty and optimize sales opportunities. These devices monitor our health and therefore health insurers can use this assess risk smarter, reducing the premium for those who are healthier for instance and improving the overall economy.
Blockchain can also help secure the data of customers, ensure that insurance history and transaction is kept safe.
Impact on Insurance Industry
Despite this industry being new, it is predicted to have a greater impact on customer experience with insurance claiming time reduction and analytics being a differentiation factor.
With technologies being connected, there will be an emergence of usage based models, autonomous cars, wearables, digital health including genomics, drones and use of artificial intelligence.
Despite these facts however, less than 45% of insurance industry players have FinTech strategy and even less than 15% are active participants in incubator programs. There is a predication these numbers will increase in order to stay competitive and up to date with FinTech
There is also a predicted change in the need for employees with training in the psychology and behavioral economics trades.
Cases and Emerging Trends
As an emerging trend the service is still at an infancy stage and not enough statistics exist to give a view on the trend.
Motor insurance telematics is still at an incipient stage—even in Italy where market usage is above 8%. Benefits of motor insurance usage monitoring technology can be categorized a proactive approach, objective information and loss prevention and mitigation.
Snapshot by Progressive is a USA based company that installs a (usage gets monitoring technology) telematics box for a period of 75 days, the client a price adjustment based on his or her own style of driving
Current startups in the space are proving that the use of technology is a positive development for the insurance business itself and for its customers, who are looking for more options, flexibility, and transparency.
Insurtech will not only benefit the business itself but will also benefit it’s customers.