AI, blockchain, RPA, AR, biometrics … When we conjure up the technological innovations disrupting the burgeoning financial services industry in 2020, it’s unlikely that we’re mentally earmarking the insurance sector as being on the cusp of enjoying the spoils they’re delivering. And yet, dear reader, you’d be mistaken. InsurTech has now become one of the fastest-growing sectors in fintech, with a staggering $16.8 billion pumped into it since 2012, and no signs of slowing down any time soon. We recently explored how RegTech is redefining business processes, the role of 5G in financial services and building societies (the land that digital forgot). Today we’re exploring InsurTech – the disruption that’s reinventing an industry.
InsurTech itself is the use of technology to transform the traditional insurance sector model to better respond to the needs of the 21st-century business – and customer. Today, there are thousands of InsurTech startups already transforming the way we ‘do’ insurance, with as many standing by to bring innovation to an industry crying out for it. And yet. with its hard-to-shift reputation of skullduggery (driven by the financial crisis of 2008), a reluctant customer who believes they’ll likely never see the benefits of costly insurance premiums, and a perceived near-glacial pace of willingness to transform, InsurTech might just have its work cut out for it. But the potential for disruption presents vast and very lucrative opportunities to those who are ready to embrace the advance of inevitable change. For the ones who are ready, collaboration, emerging technologies and the new customer are turning the ignition key – could 2020 finally see the insurance industry take its place in the spotlight?
InsurTech – the benefits
Bestowing personalised products and quick, easy access, InsurTech is determined to bring a sea change to a sector that’s not known for ease and efficiency. Just moved home and need to insure the lot? InsurTech means you can do just that – on your phone, and in minutes. Just got a job a 2-minute walk from your new house? Car insurers, courtesy of InsurTech, will bag you a quick, personalised pay-as-you-go insurance deal for the miles you drive, and not for the time your car spends on its new drive. For insurance companies ready to grab the baton, InsurTech will see them:
- Streamlining vast amounts of ‘idle’ data to provide new business intelligence, in turn driving new products and services
- Enhancing risk management
- Efficiently tracking product and service performance,
- and predicting loss and fraud
For the digital customer, expectations of everything yesterday please – not to mention joined seamlessly across every aspect of our digital existence – are now routine, and InsurTechs are hell bent on meeting them. Free from the costly, complex burdens of legacy systems, technologies and products, these firebrands are offering us a new way to look at insurance …
- Greater choice
- Personalised products and services – driven by new data insights
- Fast, efficient, transparent automated end-to-end claims management
- Increased interaction – enhancing provider/customer relationships and driving brand loyalty
InsurTech and the competitive advantage – who’s nailing it
InsurTech’s are mostly focused on personalisation, speed and flexibility to meet the needs of the digitally savvy customer, and whilst many of these new companies are intent on going it alone in a kind of industry smash-and-grab, there are as many others ready to collaborate with the incumbents who themselves can bring decades, nae centuries, of unparalleled expertise and knowledge to the table, and creating a perfect partnership storm in the innovation teacup. Here’s our pick of the players that have got us talking at WHQ:
Zego – The first UK InsurTech to get its own insurance license, Zego truly is an InsurTech business for 21st century working. Created to address the problem of insuring workers in the gig economy, this InsurTech startup provides the kind of flexible insurance that incumbents struggle to provide but the need for which is growing rapidly. Zego fulfils that need with its B2B model, partnering directly with companies like Uber, Deliveroo, UberEats, Stuart etc and offering paperless, flexible insurance with 24/7 support – just the way we like it.
Flock – Launched in 2015, London-based, government-backed InsurTech Flock provides a risk intelligence platform for drones – and insurance for the drone’s pilots. Driven by big data to “intelligently price” the insurance cover it offers, their first product, Flock Cover, is pay-as-you-fly insurance born out of a partnership with insurance incumbent Allianz. Flock Cover is exactly the kind of on-demand, short-term customised cover that drone pilots need for these last-minute drone flights over the Cairngorms – provided instantly via Flock Cover app along with safety advice and drone flying tips.
Lemonade – “Instant everything”, “Built for the 21st century”, “Monthly subscriptions” … we smell a startup on a mission, and we’re not wrong. Recently voted #1 for customer satisfaction (out of 270 companies), US-based Lemonade, uses a combination of AI and blockchain technology to provide both homeowners and renters with insurance – so far, so nothing-to-see here. But when blockchain enters the picture via its smart contracts, claims are rapidly processed to ensure customers get their payout quickly – as in 3 seconds quickly. With instant insurance, cancel-anytime subs, personalised policies, and probably the fastest settlements ever, no wonder it’s a customer favourite. And now in Europe, expect to see more of these guys in 2020.
Neos – Anyone for a bit of insurance prevention? UK-based startup and trailblazer Neo Banks offers a combination of connected technologies designed to prevent the damage that could lead to a home insurance claim. Clever, right? The technology – which includes motion sensors, cameras and smoke detectors – alerts the smart-home owner when there’s a problem, so it can be dealt with before it causes damage and the inevitable insurance claim follows. More brilliantly is the system will even contact the 24-hour monitoring team that comes with the setup (off-site!) so that they can assess the situation and dispatch the help that’s needed to fix the problem. No claims, and no payouts – true InsurTech innovation at its best.
Fizzy – A subsidiary of global insurance behemoth AXA, Paris-based Fizzy offers something every traveller needs – flight delay insurance. All customers need to do – via the Fizzy app – is enter their flight details, personalise their insurance coverage, and then make a payment. From that point onwards, if a flight is delayed for more than just two hours, Fizzy’s blockchain technology means that customers are immediately compensated. Another InsurTech using the smart-contracts model means rapid flight delay verification and super-fast compensation – and get this: they cover 80% of all worldwide flights.
So it’s official – the opportunities that the InsurTech’s are bringing to redefine traditional insurance business models are as exciting as they are game-changing. Yet what this rapid disruption is making clear is that established players must adapt. Survival in this climate of rapid innovation means rethinking offerings, and accelerating plans for digital transformation – after all the promise of cost reductions, efficient processes and new revenue streams are there for taking. For those ready to adapt, these new, future-focused InsurTech’s offer promising collaborations ripe with potential to cement the incumbents part in a sector on the cusp of bright, exciting future. Interested in finding the right digital partner to kick-start an InsurTech initiative? Look no further. Contact Waracle today to start the conversation.