Insurtech is short for “insurance technology”, which is the implementation of technology into the insurance industry. Today, insurtech is experiencing rapid growth and is starting to become an integral part of the financial world.
This article will explain what insurtech is, why it matters, and how it differs from traditional insurance.
What is Insurtech?
Insurtech is a technology used in the insurance industry to increase the efficiency, transparency and speed of the insurance process. Insurtech usually uses technology such as mobile applications, the internet, and big data to assist insurance companies in managing risks, providing services to clients, and managing finances. Insurtech differs from traditional insurers in that it focuses more on technology and offers services that are faster and more accessible to consumers.
Insurtech first appeared in 2005 when the online insurance company, Esurance, started operations. Since then, insurtech’s growth has continued to accelerate, especially after 2010 when many new insurtech companies started to emerge. Today, there are hundreds of insurtech companies operating around the world, with some becoming major players in the insurance industry.
Some examples of successful insurtech companies are Lemonade, Root, and Metromile. Lemonade offers home, sick and pet insurance with an easy and fast application process via a mobile application. Root provides car insurance that is based on data collected through mobile applications, thus providing a fairer price for consumers. Metromile provides car insurance based on the distance traveled, thus providing a lower price for those who rarely use their car.
Benefits of Insurtech for Insurance Companies and Customers
The application of technology in providing insurance services to Insurtech certainly breaks a number of boundaries, such as place and time restrictions. This can not only be felt by customers as users of insurance services, but even insurance companies that provide these services.
Some of the benefits that Insurtech can provide include:
1. Speed
By utilizing digital technology and the internet, the process of filing and paying for insurance is faster for customers.
2. Transparency
The use of digital technology in Insurtech also allows companies to provide easier explanations of their insurance services. And candidates can get this complete information by reading information about insurance policies provided by insurance companies.
3. Lower costs
In addition to time and place, implementing technology in Insurtech can provide lower prices because the company’s operational costs are smaller.
4. More accessible services
Insurtech usually provides services that are more accessible to consumers, such as through a mobile application or website.
Challenges Hampering Insurtech’s Development
Even though it offers many advantages, insurtech also faces several challenges that hinder the development of Insurtech, including:
1. Regulations are different in every country
Regulations that apply to the insurance industry differ from country to country, making it difficult for insurtechs to operate globally.
2. The problem of public trust
Some people are still hesitant to use insurtech services due to a lack of trust in new technology.
But, despite the challenges, insurtech’s future prospects still look bright. Because technology should still be developing and whether you like it or not, it will become an integral part of the insurance industry. In addition, many traditional insurance companies are also starting to realize the importance of adopting technology to compete with insurtechs, so that the prospects for the development of insurtechs in the future are quite promising.
How InsurTech Works
By adopting InsurTech, insurers can streamline and improve backend processes as well as improve the customer experience and save the company’s operational costs. The power of technology can be harnessed by businesses at every stage such as market research, marketing, customer service and after sales customer service.
Applying InsurTech to an organization’s operations based on technical tools that gather customer data sources, AI technology with chatbots to solve problems and provide services to customers, get customer customer base data as well such as demographics, behavioral preferences and others. Below are typical tools from InsurTech:
– Chatbots and applications on smartphones: these are tools that insurance companies implement to simplify additional processes such as customer consultation, claim settlement and others. Insurance companies no longer need to hire employees to serve customers to answer all their customer’s concerns, with chatbots the many concerns and questions from customers can be answered automatically day and night, personalized according to customer needs. As well as simplifying the customer service experience, this also results in significant transportation cost savings for the company.
– Apart from Chatbots, there are also smartphone applications that were born to meet needs and convenience, thereby enhancing customer experience. Customers can now easily take photos with their phones and send them via the app instead of having to print out copies and other documents. It used to take up to several months to close an insurance policy, but now it only takes a few hours to complete an application by answering questions via the application, of course, this saves time and resources for both the customer and the company. In addition, entering insurance through an application on a smartphone is the most time- and cost-effective way for customers and insurance providers, such as:
– IoT (Internet of Things): this provides accurate real time interactive data, integrates blockchain technology and creates self-executing contracts, supports fraud protection and hedging for customers as well as insurance providers.
– AR (Augmented Reality) technology: on a smartphone allows you to scan contract documents digitally and get additional information about potential insurance coverage.
– Optical Character Recreation (OCR): this helps the process of entering and storing customer information automatically, quickly and accurately. Once digitized and stored, insurance businesses can conduct research to build marketing strategies, treat customers and advise on insurance plans with each customer group.
Build Smart Contracts
InsurTech has also facilitated insurance companies to develop documentless smart contracts, smart contracts are basically blockchain-based contracts between two or more parties. The automated blockchain protocol then facilitates, validates and enforces the negotiation or execution of contracts. For example considering a life insurance policy that pays out a designated number of beneficiaries upon the policyholder’s death, a smart contract performs an instant check on an online death register to automatically determine and trigger a payout.
Smart contracts increase the efficiency and speed of claims management. Registration, validation and application of agreements are made easier because they can be enforced using computer protocols without the intervention of claim reviewers. This not only significantly reduces the risk of fraud but also increases customer satisfaction so that this technology allows insurance companies to manage claims in a more responsive and transparent way.
