"Insurtechs" are technology-driven insurance firms that take advantage of new technologies to provide coverage to a more technologically aware consumer base. Regulatory restrictions have been lowered in several areas. Insurtechs have been encouraged to test their novel business strategies on select customer groups in Australia, Singapore, and the United Kingdom, for example, without having to adhere to the complete regulatory regimes that apply to incumbents.
Insurtechs, like fintechs, are spreading innovation throughout the industry, posing a competitive threat to incumbents but also providing potentially lucrative opportunities for collaboration in the shifting landscape. Instant digital transactions that are carried out smoothly across digital channels are becoming the norm.
While insurtechs have yet to make significant inroads into the industry, they are rapidly expanding and will soon take a significant part of value pools. The level of incumbents' position in the future generation of the insurance sector will be determined by how rapidly they adjust to these inevitable market developments.
How can companies bring in and retain customers?
More marketing spending is not the solution. This is especially essential since increased sales expenses have an impact on the price in the medium term, which is the key reason customers switch insurance in 67% of cases. Due to law, so-called price walking (low-cost beginning offers that grow in price over time) has become increasingly difficult for businesses to undertake.
What can companies do?
- Budgets should be managed more wisely
Every dollar spent should be allocated as effectively as possible to the most appealing customer profiles (those with the highest lifetime value, for example), as well as the most effective tactics. Smart bidding and seeking to engage with clients early in the process may also assist, and in our experience, they can deliver a 30% and 10% increase in efficiency and growth, respectively, with the same amount of expenditure.
Intrayear main due dates and extended periods have long been tried by several providers. Comparative portals that bundle their marketing expenses throughout the year-end renewal season may benefit from this technique. And those year-end expenses have risen dramatically in recent years. Modern telemetry methods also allow for the creation of new client categories.
- Continuously capitalize on leads
Visibility is only beneficial if it results in more clients signing contracts. According to a study by Similarweb, digital pioneers' websites attract more visitors, who remain three to four times longer and click away from the home page just half as often as visits to non-pioneer sites. After that, omnichannel providers may follow up offline, which necessitates great lead management in terms of both technology and operations.
- Use innovative ecosystem approaches
In the long run, providers can promote awareness in novel ways, such as targeting motorists when they buy a car, change a tire, fill up at the gas station, or park. Ecosystem services also boost customer loyalty, and the influence of this strategy will go well beyond 2022.
How can Insurtech companies work on benefits?
For the Consumer
Consumers drive insurtech, which allows them to assign value to every element of their lives. It permits family, friends, and other members of the community to be included in comprehensive coverage. Consumers are involved in the whole process, from registration to claims, and they even have a say in who sits on the claims jury panel during a hearing. Customers gain from this increased level of understanding and participation.
- Convenience and ease of access
Most people nowadays do all of their work on their phones. When it comes to insurance, they want the same mobile convenience. Consumers may compare, verify, and make decisions using insurtech from the comfort of their own homes. Consumers and insurers will save time by being able to verify the progress of claims from their mobile devices.
- Increased security and customization
Companies that use insurtech have strict anti-spam and security standards to guarantee that consumers have trust while transacting online. It also enables the insurance company to collect and analyze data from customers, allowing for improved services and personalized solutions.
For Insurance Providers
Insurtech has the potential to save the insurance industry both time and money:
- Keep fraud at bay to save time and money, especially in customer identification verification and anti-money laundering.
- Automate data gathering and assimilation into records to make underwriting easier.
- Introduce novel insurance distribution techniques, such as peer-to-peer (P2P) insurance, in which a group of consumers pools their premiums to protect themselves against any risk.
- Smart contracts that go beyond typical claims can help you promote creative new items.
- Automate claims to reduce mistakes and enforce contracts automatically.
Key Applications of Insurtech
- Verification of Customer Identity
Insurance firms, reinsurers, and brokers must complete the Know-Your-Client (KYC) procedure as part of the customer identification process. To verify identities, insurers must gather all counterparty information, which entails dealing with a large volume of data. Here, insurtech can provide much-needed assistance. Some insurtech firms have developed prototype software that maintains client identity information from issuing agencies using blockchain. This gives insurance companies, reinsurers, and brokers unlimited control over all consumer records.
Companies may utilize blockchain technology to generate a standard claims document that can be examined in real time by underwriters. They can also automate smart contract parts, allowing for flexible and transparent implementation. Customers and insurers' connections are strengthened as a result.
- Smart Contract Formulation
Smart contracts use automated protocols to make document authentication, negotiation, and enforcement as simple as possible. In the instance of a life insurance policy payout, the system searches online death records, verifies the claim's legitimacy, and begins the payout—all without bothering the bereaved family.
Claims clearance becomes faster and more accurate using smart contracts. Without the need of an assessor, companies may register contracts, conduct authentications, and clear claims considerably faster. This lowers the risk of fraud while also increasing client pleasure.
- Detecting Fraud and Risk Prevention
A significant proportion of assertions are false. Historically, the expenditure necessary to properly handle fraud has been exceedingly significant. Companies can use insurtech to identify and reduce fraud through a decentralized digital repository. This ensures that the individual and the claim are genuine, preventing repeat transactions or third-party involvement, and making all transactions public.
Insurance firms must be able to automate premiums and claims processing. Auto insurance customers, for example, get payments depending on the number of miles travelled. The miles are tracked in real time by a telematics device in the car, which allows the premium to be computed and paid. This not only makes the procedure easier, but it also cuts down on mistakes.
How insurtechs differ from incumbents
Insurtechs can approach the market in fundamentally different ways than traditional insurers. Insurtechs benefit from their independence from legacy goods, processes, and IT systems. They may create digital processes, products, and systems from the ground up using cutting-edge technology. Insurtechs, like fintechs, focus on certain value pools in the industry rather than attempting to deliver end-to-end solutions. Less investment and faster profits result from simplified IT and operations. Insurtechs leverage their digital knowledge in a variety of ways that are typical of fully digital businesses:
Artificial intelligence and bots are being used by insurtechs like Knip in Germany and Clark in Switzerland to deliver robo-advice through a digital consumer interface with digital distribution.
- Targeted product concepts
Small-ticket insurance solutions may be tailored depending on usage or value-added services, thanks to insurtechs. Cuvva allows clients to purchase hourly auto insurance on the go using their smartphone. Insurance coverage is available as an add-on purchase on Kasko and Simplensurance's websites.
Insurtechs can save money and exceed client expectations by using an automated-only strategy. SnapSheet, for example, provides end-to-end automated claims handling, while Claim Di's "shake and go" mobile software allows claimants to connect with their carriers on the accident scene just by shaking their phone.
- Data-driven decision making and insights
Insurtechs are using machine-learning techniques to deliver unique, individualized goods and services with access to a variety of data sources, including telemetry from installed boxes and smartphone applications. In several US jurisdictions, Metromile, for example, offers pay-per-mile vehicle insurance to low-mileage drivers. FitSense enables life and health insurers to integrate wearable technology data in underwriting, pricing, and claims management.
Barriers and Solutions for Insurtech
The most significant impediment to insurtech is the question of privacy. Credit ratings are tracked using distributed ledger technology, which is a shared database shared across different companies and sites. It is always evolving, posing problems for data protection legislation. Regulators with diverse methods to distribute ledger technology management face privacy issues from international jurisdictions. Distributed ledger technology may be decentralized due to its collaborative nature, which implies that no one entity can be held liable in the event of a disagreement. This makes completely integrating into insurtech difficult.
Those interested in this technology should look into the strategic legal implications for their firm and jurisdiction. Another option is to get in touch with authorities on a regular basis to stay current on worldwide legislation.
Insurtech is transforming the insurance industry by allowing consumers and service providers to conduct business in a smooth, error-free, and secure manner. Insurance businesses must invest in new technologies and tailor solutions to specific needs in order to best serve clients.
Yes, you must engage an Insurtech partner to further give you optimal solutions to expand visibility in the sector and industry before you study legislative aspects. So now what you have to do is, contact your best Insurtech consulting company, TransformHub:
Email: sales@transformhub.com
Phone: +65 31384660
+65 90084846
