The transformative convergence of technology and insurance has allowed for new opportunities ranging from smartphone apps, claim acceleration tools, online policy handling, and more. Thus, numerous insurtech startups have emerged in the space, driven by investments from a wide range of funders who see value in a new era of insurance.
Since
The startups in the space are diverse. Some are partnering with incumbents, while others are seeking to disrupt the industry with agile offerings and superior customer experience. Even giants from outside insurance are increasingly jumping in. For instance, Google’s parent company Alphabet recently invested millions in Oscar Health, which aims to revolutionize how health insurance is administered and sold. Regardless, the insurtech industry is an exciting new frontier for investors, startups, and customers alike. Here are three reasons why.
Oceans of Data
Due to the concept of “spreading risk amongst many” dating back to ancient
With years of knowledge in the palm of their hands, either through consortiums or partnerships with insurers, insurtechs have the capability to analyze data with modular models and platforms to improve business performance. Whether analyzing auto claims and costs across state or city lines, insurtechs can pull years of data quickly and assess risk, resulting in a fair and profitable pricing tool.
The industry has relied on outdated practices and manual processes for years, which drives inefficiencies in claims management and underwriting. This issue is exacerbated by an already complex sales funnel that traditionally operates a B2B2C model. The emergence of partnerships among insurers and insurtechs streamlines clunky data and document management with new technologies.
Now, startups and their investors have the opportunity to gain a tremendous market position and improve the performance of billion-dollar companies.
Stable Profitability
The insurance industry offers proven stability, with some insurers operating profitably for more than 200 years. Industries in this position typically would find their growth plateauing, but in fact, the opposite is happening. Those in the
Transformed Customer Experiences
Due to regulatory hurdles and legacy technology, there are considerable opportunities to leverage new best practices and technology in the insurance sector. These opportunities have grown with the increasing number of Millennials and Generation X purchasers, who often choose to work with companies that offer faster and simpler customer experiences.
Convenience is vital for these generations, with Pie Insurance noting that busy, full-time workers usually shop for insurance when offices are closed on evenings and weekends. Companies that offer 24/7 direct online quotes and claim submittal options have the upper-hand over the agent-carrier model as shoppers can avoid office visits.
Finally, technologies such as the Internet of Things (IoT) and artificial intelligence have empowered insurtechs to develop new products in home, auto, and health insurance that drive customer engagement and retention. These insurtechs concentrate on distribution innovations, making products more readily available for customer use, comparison, and purchasing for a simpler customer experience. Again, these companies can leverage established technology in a new market, increasing speed-to-value for insurers and ROI for investors.
The insurtech sector is still in an early stage of development, but insurtech companies are gaining traction, driven by investors who see a steady, continual return on their investment.
