InsurTech is an offshoot of “FinTech,” which refers to technology shaping the financial world, including banking and payment systems. Now similar technology is emerging in the insurance industry.
A $2.6 billion-dollar business, InsurTech isn’t going away. It’s only getting bigger.
While many insurance companies might like to continue doing business as usual, new technologies are set to revolutionize the industry. Companies embracing InsurTech may prosper while those that don’t may get left behind.
Disrupting the status quo
According to a 2016 Global FinTech report by PwC, a network of firms in handling assurance, advisory and tax services, three out of four insurers predicted FinTech would be a disruption to their business within five years. Yet only 43 percent of those insurers reported making tech part of their corporate strategy.
In its report, PwC urges insurance companies to “embrace the revolution” and strategically define their path forward. They suggest exploring new trends and innovations, strategic partnerships, involvement in InsurTech startup programs and new product development.
Digitally savvy consumers want the innovation, convenience and discounts that often come with new tech.
Many of these emerging technologies are personalized to the customer and particularly to millennial customers. For example with car insurance, customers can get insurance quotes simply by sending a photo of their driver’s license and the car’s vehicle identification number. Other InsurTech examples include usage based “pay-as-you-go” insurance and microinsurance.
Insurers need to address how to handle risks of emerging technologies such as car-sharing and vehicles with self-driving mode. Both of these areas show strong consumer interest and growth.
New technology can also provide insurers with useful data about their customers that can help them tailor their products to the customer.
For example, fitness trackers, known as sensor technology, can help monitor a patient’s health. Better health could mean lower health risks and lower premiums.
Many consumers are open to wearing a fitness tracker, especially if they are incentivized with things like free or discounted gym memberships.
PwC says sensors will help predict, prevent and mitigate risk. They say insurers can use that data to underwrite policies without even requiring physical exams.