Is Insurtech – that term to describe the new generation of tech-driven industry players – the flavor of the moment, or is it a bona fide disruptive force poised to transform the industry? Analysts at Financial Technology Partners, for one, believe it’s the latter, and their reasoning is spelled out in a new research brief.
As the report’s authors put it: “every insurance process -- from marketing to underwriting to sales to claims, is already being truly revolutionized by reasonably “simple” online, cloud-based software and mobile applications, technologies that other industries sectors have leveraged for years.” Examples include comparison sites that “are driving costs down and creating more transparency,” and increased leveraging of data analytics to provide “real-time claims services and more adaptable underwriting.” In addition, new types of connectivity solutions are bringing carriers, agents and brokers closer together.
Insurtech itself has grown quickly. The report notes that the term “Insurtech” was only first mentioned in July 2015. In the short 14 months that have passed, there is now a “proliferation of insurance tech startups” emerging, the report continues. While there are some attempts to launch entirely new carriers, most Insurtech innovations are focused on “new digital tools aimed at helping consumers better understand and become more involved with their insurance policies, while still others are looking to enhance and digitize the operations of the existing insurance ecosystem.”
Areas where the impact of Insurtech is sure to be felt include the Internet of Things, Peer to Peer (P2P) transactions, on-demand services, and tech-driven innovation. Financial services – the banking and money-management side, has seen enormous disruption in recent years. But the insurance industry has been late to the disruptive technology game, the report observes. However, it adds, “the industry now appears to be at a key inflection point as many different constituents in the FinTech ecosystem have their sights squarely set on insurance as the next great opportunity.”
There are also a range of innovations outside the industry that are poised to create major disruptions. Telematics and big data are already a part of many insurance operations, and emerging technology trends include driverless cars, the Internet of Things, the connected home, Blockchain, wearables, and artificial intelligence. The industry has only barely begun to feel the effects of these new technology offerings.
Still, the report’s authors caution, the insurance industry is “still a complex, highly regulated industry with outdated, but entrenched processes. The industry won’t change overnight.” At the same time, unless they are actively partnering, the new breed of Insurtech providers will surely encounter stiff competition from existing carriers, who “certainly do not have their heads in the sand,” they state. If anything, many established insurance companies are actively seeking out partnerships with InsurTech startups, or even facilitating their own startup ventures to shake loose innovative forces within their organizations.
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