Insurtech: it’s a name increasingly being used in insurance circles, a portmanteau of the words “insurance” and “technology”. Insurance is an industry that has long needed some disruptive innovation; an injection of fresh ideas to address the changing needs of the consumer. We’ve seen some serious price hikes recently, and this combined with the technical nature of insurance has caused exasperation for consumers.
Thankfully, Insurtech could be an answer to this. Insurtech has seen a big rise in investment this year – more than £294 million in Europe, with over 200 million of this spent in the UK. That’s up from just £7.8 million in the first half of 2016.
A big reason for the rise in this investment is not only the advantages of a more consumer centric approach, but the new ability to move insurance away from a service only used when something goes wrong, to a service that encourages safer behaviour. Most Insurtech products focus on collecting data about you in order to build an accurate prediction of the risk you pose.
To put it simply: in order to avoid putting you into a broad category that may not necessarily reflect you, insurance companies need data about you to determine your specific needs. So technology can address these issues.
Data-sharing technology and Smartphones
Roy Jubraj, Accenture’s Digital & Innovation Lead for Insurance said in a statement: “The explosion of data made available by an increasingly connected world is bringing unprecedented change and allowing modern insurers to understand customers and create personalised, dynamic relationships with consumers”. One of the most interesting consequences of this is the opportunity to create niche insurance products tailored exactly to consumers needs. An example of this is Cuvva, a pay-as-you-go car insurance provider which allows you to be insured and pay for insurance only when you use your vehicle. Its app allows you to get insured on any car in 30 seconds.
Internet of Things
The Internet of Things is simply the name for devices connected to the internet that can be used to talk to us and each other. For example, Amazon Alexa can be used to turn smart lights on and off, and used to play online music apps such as Spotify. Apps like Neos provide a set of IoT enabled devices that allow you to control vital aspects of your home. For example, leak detectors, wireless cameras and door sensors can all be accessed via its app.
This means that in the event of an emergency insurers will have access to a large amount of information that previously wouldn’t have been available. Furthermore, it gives you the ability to prevent damage before too much is caused.
Blockchain technology has huge potential for insurance purposes. Originally developed for cryptocurrencies, it uses a distributed, secure ledger that allows users to access a wealth of information. Once the information is applied to the blockchain it can be accessed by any stakeholder.
Blockchains main potential is for preventing fraud. Companies such as Everledger use blockchain to store records of precious stones. Insurers and potential buyers can then check the history of a stone including previous claims made.
Similarly, ‘crash for cash’ scams cost the insurance industry approximately £400 million a year. When multiple claims are made against different insurers it is hard to track if the claim is fraud or not. With blockchain it can quickly be checked.
Consumer convenience would also be improved under blockchain – “smart” contracts could trigger claims automatically once certain conditions are met, speeding up the process for you, and can connect with the Internet of Things. Accidents detected by these devices could automatically trigger a process through which you can quickly get your money back. The money saved through the vastly reduced amount of fraud would also help cut down insurance premiums.