Like many business sectors and industries, BOLD Awards has seen the insurance industry undergoing a digital revolution, and at the forefront of this transformation is insurtech. Insurtech is a subset of fintech, and refers to technological innovations that are created and implemented to improve the efficiency of the insurance industry. The fusion of insurance and technology is transforming how insurers and customers interact, and in recent years it has improved the sector by enabling insurance companies to improve customer experience, develop new products, lower costs and enhance underwriting and actuarial processes.
This blog explores the innovative world of insurtech, showcasing how technology is reshaping the insurance landscape, from underwriting and claims processing to customer experiences and risk assessment.
Real-World Applications of the Impact of Insurtech
Digital Underwriting: insurtech platforms use artificial intelligence and data analytics to assess risks more accurately, allowing for customized policy offerings and fairer premiums. Natural language processing and machine learning also help insurance professionals assess and manage risks better. This is done by understanding complex scenarios, evaluating probabilities and estimating outcomes.
Claims Processing: Automation and blockchain technology are streamlining claims processing, reducing fraud, and expediting settlements, providing customers with faster relief in times of need. Large language models (LLMs) can help improve claims processing and settlement by verifying the validity, accuracy and completeness of claims, and automate tasks including document review, damage assessment and payment calculation.
Customer-Centric Services: in a price-driven market characterized by low engagement levels, dealing with insurance companies can often be a negative experience. Insurance providers are using insurtech to improve customer experiences with user-friendly apps, chatbots, and real-time access to policy information.
The insurance sector employs a lot of people, and many tasks require an ability to problem solve in a flexible and ad hoc manner. They have to seek out just the right information for a particular situation and then communicate it to colleagues or customers in a digestible fashion. To be a real improvement, chatbots have to be well-trained to respond to customers’ requests and questions.
Large language models (LLMs) help insurance professionals write and edit policies and contracts that are clear, accurate, compliant with regulations, and easier for customers to understand.
Telematics and Usage-Based Insurance (UBI): Insurers are offering UBI policies that use IoT devices and data analytics to monitor driving habits and calculate premiums, offering safe drivers more affordable coverage. UBI programmes generally measure speeding, acceleration and harsh braking, along with mileage driven and the time of day that a driver is on the road. Drivers get a driving score and often some tips for improving that score, and driving skills that are better than average are rewarded with lower insurance rates.
Insurtech Success Stories
Lemonade
Lemonade is a well-known insurtech company that uses AI and behavioral economics to provide fast and affordable insurance for homeowners and renters. Their technology-driven approach makes insurance more transparent and user-friendly.
Oscar Health
Oscar Health leverages data and technology to offer personalized health insurance plans. Their user-friendly app allows customers to find doctors, access virtual healthcare, and manage claims with ease.
PassportCard
Passport Card, which was founded in Israel, is a private medical insurance and international travel insurance provider that has turned the claims process upside down. Customers insured with PassportCard use a prepaid card to pay health service providers, eliminating the need to submit invoices or pay deductibles. There is no paperwork or long waiting times while claims are processed, and no nasty surprises such as rejected claims that leave customers out-of-pocket.
Metromile
Metromile, a startup based in San Francisco, provides pay-per-mile car insurance, allowing infrequent drivers to pay less. Their telematics technology tracks mileage and helps reduce the cost of insurance for low-mileage customers. This method of driver insurance based on distances driven can also be more appropriate for people who use car sharing rather than own a vehicle.
Marshmallow
UK-based car insurance provider Marshmallow uses big data and artificial intelligence (AI) technology to offer competitive policy rates to younger drivers and people with low credit scores. Offering more affordable insurance to additional car owners and users shows how insurtech is growing the overall market size.
Customer Resistance
Although technology provides many benefits for insurance companies, not every customer is going to see the benefit of lower costs. There are also customer concerns over the security of their personal data, and some will want to know what has been collected, how accurate it is, how it has been used, how it is stored, if it is sold on to other users, and how secure it is and who has access to it.
Insurance providers are advised to be transparent in how they respond and consider carefully how they explain their use of technology to customers.
Conclusion
There’s a lot going on in insurtech, and a July 2023 McKinsey report claims the United Kingdom is positioned as a global leader in the field. Of the estimated 3,000 insurtech firms in the world, approximately 280 are located in the United Kingdom – the highest number of insurtechs per capita among all major world economies. Insurtech is also one of the UK’s fastest-growing startup sectors. Perhaps some of the new startups will go further than improving efficiencies within the insurance sector’s current setup, and disrupt it with truly transformative change.
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