Insurtech is the fusion of big data with smart hard technology
The business goal of insurtech is to reduce premium costs and increase customer retention. These are the two thorniest issues in insurance. Making both easier to achieve is a lucrative business opportunity.
Smart technology provides the hardware base to help achieve this opportunity. What is particularly great is that it is not the insurance company’s job to provide this technology as it is already in the hands of the customers though consumer electronics: computers, tablet devices and especially smart mobiles. It also covers those devices that are becoming connected to digital architecture including household appliances and cars especially.
The penetration of Internet of Things (IoT) and Telematics through these devices, automatically connect to insurtech platforms. It provides real time information which adjust risk premium pricing for insurance policy holders and help reduce and clarify queries related to the claims process. The use cases of this are enormous. For example, automobiles that can detect speed and mileage of a driver or wearable technology which track and monitor a persons activity and lifestyle.
Data connectivity is critical for insurtech
The main issue is data connectivity. Key to solving this is interoperability between software achieved by Open API’s. Application Program Interface (APIS)offer a way for interoperability between software thereforeallowing the exchange of valuable data. A platform can use API’s to link the everyday data collected by individuals, telematic devices, wearable devices and smartphones and approve access to their insurance companies.
Artificial Intelligence, Robotics and Blockchain will accelerate Insurtech adoption in the marketplace
Large amounts of data go hand in glove with new technology to manage it. This means insurance is at the forefront of data robotics and algorithmic trading. Artificial intelligence (AI) and Machine Learning are fundamental catalysts for Insurtech business development as the technology can analyse and increase the probability of meeting a set of goals. The technology allows insurers to reduce risks, offer a greater product range and potentially reduce overall costs to the customer.
AI mimics human intelligence and deals with learning, reasoning and self-correction whilst also taking account of the surrounding environment. Natural language processing (NLP) Ais, as deployed on Lemonade’s platform, use linguistics and computer science to provide chatbot interaction with customers to settle claims. The growth in data collation is also supporting the growth of robotics which uses self-learning and artificial intelligence technologies. Cognitive technologies are products of artificial intelligence which includes machine learning, speech recognition, machine vision and emotion recognitions.
Blockchain technology can lower overall running costs for insurers and reduce insurance premiums for customers it can allow information to be shared securely between the customer, insurer and any other parties in the ecosystem which will allow insurers to speed up the process without compromising security of information exchange.
We anticipate that the evolution of technology for insurtech will accelerate over the next few years. As these disparate strands of technology start to take advantage of each’s capabilities, the whole will end up more powerful than the sum of it parts.
Sonya Kapur
Economist and founder of Pangea Ultima
It is an exciting area and perhaps you would like to know more about technology and InsurTech. If so, contact me at Pangea Ultima
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