The potential impact of technology on the business of insurance cannot be overstated. Although “InsurTech” is relatively new, the sector has drawn significant attention from investors, as well as from established insurers, who are beginning to change their service models. In response to changing consumer habits, especially for tech-savvy millennials, new innovations are emerging every day, with the goal of offering simpler products tailored to specific needs and a streamlined customer experience. As Miami insurance law attorneys, we are following the InsurTech explosion with interest, both for its potential benefits to policyholders, as well as for the resulting industry disruption.
What is InsurTech?
The term “InsurTech” encompasses the innovative use of technology in insurance. It is a subset of financial technology, or “FinTech,” which has transformed the banking world. InsurTech is the technology that lies behind the creation, distribution and administration of insurance. Smartphone apps, wearables, claims processing tools, online policy handling and automated processing are all InsurTech. Much of the current InsurTech market involves start-ups targeting millennials, who are accustomed to instant gratification, by focusing on speed, efficiency, and cost reduction. Examples include: Lemonade, whose motto is “instant everything,” Slice (“instant coverage for all”), and Hippo (“modern home insurance”).
The success of these and other start-ups also relies on the demand for greater customization of insurance products, as well as the prevalence of the sharing economy. For example, Airbnb hosts have created the need for limited commercial coverage, as opposed to a comprehensive commercial policy. Pay-per-mile automobile insurance caters to infrequent drivers, of which there are many more now. Start-ups can offer insurance for just one hour for someone borrowing a friend’s car.
How Will InsurTech Help Policyholders?
The main goal of InsurTech is to simplify the insurance process, increase efficiency and reduce costs, all to the benefit of policyholders. InsurTech companies are catering to evolving customer expectations and preferences by providing user-friendly platforms. One company, “Trov,” provides “on-demand, single-item insurance.” Through an app, coverage can be swiped on or off depending on whether a consumer wants coverage or not. Other InsurTechs use AI, machine-learning and robotics, or wearables and monitors to provide usage-based products integrated with customers’ lives in a way not usually associated with insurance. Insurers are also exploring innovations related to the claims management process, including touchless claim technology and a compressed claims cycle. By employing automation, AI, and advanced analytics, Insurtech can improve the claimant’s experience by increasing transparency and efficiency and is useful for collecting and analyzing data to provide a better service.
Insurance regulators are getting on board with InsurTech, even establishing an Innovation and Technology Task Force in 2017. Its mission is to “provide a forum for regulator education and discussion of innovation and technology in the insurance sector, to monitor technology developments that impact the state insurance regulatory framework, and to develop regulatory guidance, as appropriate.”
Miami Insurance Law Attorneys Can Answer Your Questions About InsurTech
If you are interested in learning more about InsurTech, or think you have a claim involving you InsurTech provider, we welcome you to contact VPL.