We’ve all seen how financial technology—or fintech—has completely revolutionized the way we invest and plan for our financial futures over the past few years. From causing clients to question the commissions they pay to their advisor to clients wondering if they even need a human advisor at all, fintech has disrupted an industry that has been around for decades. Startup consultants have recognized that what has happened to the financial industry is now happening in the insurance industry with the rise of insurtech. What is insurtech and how will it change the insurance landscape? And, most importantly, what lessons can you learn from successful insurtech companies to incorporate into your own insurtech venture? Here is some background on this disruptive tech sector, and what it will mean for the insurance and startup worlds.
The Value of Big Data
The amount of data that can now be collected on an individual’s habits and behaviors is incomparable—and it can be very valuable to startups that want to preserve individual attention, while streamlining and automating many processes. Specifically, big data is being used by insurtech companies to analyze trends and buying habits, and to develop processes that offer real-time pricing and other options to their customer base. Startups like UK-based Brolly are now able to use artificial intelligence (AI) to identify gaps in customer insurance policies and assist them in buying only the amount of insurance they need. Customers provide the Brolly app with information like financial attributes and lifestyles, then give it access to their inbox so it can separate out existing policy documents into ‘lockers’. This gives their algorithm a chance to spot where they have gaps and ask if they’d like quotes in these areas. Utilizing big data can bolster critical analysis and allow insurtech startups to offer a level of personalization that has previously been impossible on a large scale.
Streamlining While Still Personalizing
The seemingly contradictory features of streamlining and personalization is a vital component for insurtech companies because it’s what customers will begin demanding more and more. By 2025, almost 75% of the global workforce will be made up of Gen X and Y consumers. These generations demand services that seamlessly integrate their on and offline worlds and expect a high level of customer service paired with easy-to-use automation. What’s more, Millennials have little patience for long tedious meetings with insurance representatives, yet they still want personalized plans that are flexible and intuitive. Insurtech firms can tap into this market by pairing big data with innovative services that satisfy both needs.
The Future of Insurtech
According to surveys done by PricewaterhouseCoopers, nine in ten insurance companies now fear losing business to insurtech firms and more than two-thirds of these insurers are finding ways to participate in insurtech. Clearly, the word is out and new business consultants that recognize this fact will increasingly advise their new venture clients to jump on the insurance technology bandwagon. The time is right for those startups that can incorporate big data and personalization in new and unique ways, and capture an audience that is primed for the disruption.
The insurtech surge will change the way consumers compare and purchase insurance, and ultimately, change the way insurance companies do business. Startups in this industry who can ride the wave and capitalize on merging personalization with streamlined services stand to experience strong growth. If you’d like startup expert help on how to develop your insurtech company, please reach out to one of Promeets’ experts.