InsurTech is the combination of two words Insurance and Technology. The concept of InsurTech involves the inclusion of new innovations and modern technologies to acquire profits and productivity from the present Insurance Industry Model.
With the help of InsurTech, various Insurance companies are now able to explore paths to an innovative platform with its customized policies, social insurance, and dynamically price premiums as per the observed behaviors.
Insurance is one of the oldest and traditional methodological financial markets;hence it tends to favour those with bulky pockets and plentiful experience in the market. Initially, the broad actuarial table method was used to assign policy seekers to a risk category. Meanwhile, the adjustment was done in this way that enough people are aggregated together to ensure that the policies bring profit to the companies. In this method, there was a very basic level of data which were used to club people into groups which eventually resulted in few people paying more than they should actually pay.
Today, Technology has revolutionized customer experience and engagement by enhancing the overall process. The days are no more when the insurers used to communicate with the customers only during the claims. With the involvement of InsurTech, the traditional low-interaction model has changed. The use of the Internet of Things (IoT) is used to drive product innovations and reinvent customer engagement. InsurTechis now popularizing premiums and personalizing products based on highly granular risk assessments by gathering real-time data from connected devices and other wearables.
Collaboration with the new revenue streams is one of the factors that can enhance the overall customer experience. Using IoT based sensors and other wear-ables; it is now possible to monitor a range of risk factors. InsurTech can also enable engagement in proactive risks, mitigation services and time to time care interventions.
It is clear that insurers and InsurTechs see collaboration as the key to success in the evolving industry ecosystem, with re-imagined customer experience at its heart. Finding the right chemistry between collaborators to create a sustainable, agile position in the industry is the key to determining who will be future industry leaders.
Insurtech plays a critical role in enhancing operational efficiency such as cognitive document processing and also helps in streamlining various processes.The involvement of Artificial Intelligence (AI) and Robotic Process Automation (RPA) has resulted in the automation of various Insurance value chain processes.
In addition to this, the Insurtech firms are gaining customer insights through the integration of social media and third-party data. Use of automation, data analytics and machine learning has now allowed InsurTech startups to find new kind of policies such as pay-per-mile, usage-based, peer-to-peer, on-demand and parametric.
Technology is considered as one of the essential tools in the present competitive insurance scenario.
Talking about the statistics, the InsurTech movement is able to achieve a regular and steady pace by addressing traditional insurance challenges and gaps. The number of InsurTech firms as investments in InsurTech startups grew 36.5% annually from 2014 to 2017.
This concept has caught the eye of business capitalists to leverage their strengths to improvise the present insurance processes, enhance customer engagement, and introduce technology-based disruptive models.
The major problem faced by the InsurTech startups in date is that they still rely on traditional insurers to handle underwriting and manage catastrophic risk. However, as more InsureTech startups manage to collect consumer interest with a refined model and a user-friendly approach, they may find that the existing players go behind the idea of InsurTech and this might interest them in adapting some of the innovation.
By: Mr.Rakesh Goyal, Director, Probus Insurance