Be honest: are you familiar with the phrase “insurtech?” It’s OK if you’re not because we’re here to explain it to you right now! Simply put, insurtech is a portmanteau of “insurance” and “technology,” and is a relatively new term used to describe new technologies and innovations that are transforming the insurance industry by optimizing cost savings and maximizing efficiency for insurance providers and customers alike. Here’s how insurtech is changing the face of the insurance industry, and what it means for you.
An Intro to Insurtech
Until recently, insurance was an industry that hadn’t changed much over the years. The model stayed about the same for decades, with providers charging their customers premiums for coverage based on an assessment of their risk determined by a variety of factors. However, much like the way fintech has changed the face of the finance industry, insurtech has become a disruptive force in the way insurance companies do business. As with a number of other industries, new technologies that utilize Big Data, artificial intelligence, and the Internet of Things are paving the way for a more competitive insurance market.
How Does Insurtech Work?
It’s the year 2020, and nearly all of us have smartphones, wearables, and other mobile devices that we keep on us wherever we go. Because of this, the amount of data that is able to be collected and analyzed about us by companies looking to optimize our experiences and provide us with exactly what we need, when we need it.
Companies collect consumer data in order to better anticipate their customers’ needs so that they can nimbly and efficiently meet and exceed our growing list of expectations for what we want out of a business. This is true across numerous industries- retail, food service, and banking, to name a few- and insurance is no exception. Gone are the days of filling out long, complicated insurance forms and purchasing a one-size-fits-all policy from an insurance agency. Consumers want convenience, accessibility, speed, and above all, customization when it comes to insurance, and insurtech makes it possible for even small startup agencies to be able to offer a broad range of tailor-made policies to give the customers the coverage they need rather than charging for costly policies loaded with unnecessary features.
By collecting and aggregating data for each individual customer using insurtech, insurance companies are able to quickly provide coverage via a mobile app, adding an additional layer of convenience to the customer experience. Additionally, since insurtech can use consumer data to offer the right insurance products at the right time, people can benefit by qualifying for discounts and deals based on their up-to-the-minute driver data, sent straight from their car itself, that can make for significant cost savings compared to traditional insurance policies not driven by technology.
The Future of Insurtech
As with other industries that have been disrupted by technology, insurtech is changing the way consumers see insurance. Once viewed as a necessary evil- a bill to be paid, no questions asked, in order to comply with the law- insurtech is empowering consumers to take control of their insurance policies by tailoring them to align with their specific needs, budget, and lifestyle. Whether a customer is in the market for an extended car warranty to help offset the costs of auto repair or a renter’s insurance policy that is custom-made for a single person in a condo, insurtech allows companies to provide instant quotes that save customers time and money, adding a great deal of value and an extra layer of convenience to the chore of shopping for insurance.
As technology continues to impact our global community, we can expect further innovation from companies in virtually all industries, including insurance. The traditional way of purchasing an insurance policy will become less and less desirable to consumers looking to quickly choose the policy that best fits their needs and can save them money each month. After all, why continue paying a hefty premium for a policy loaded down with a bunch of coverage you may not need if it only takes 90 seconds to receive a quote that lets you quickly comparison-shop?
Though insurtech faces an uphill battle in an industry that is historically averse to any sort of change, consumers have come to expect a level of sophisticated, real-time service that technology allows them to experience each day in a variety of interactions. From the coffee we order over their mobile app each morning to bank transfers we’re able to complete at the touch of a button on our smartphones, we are accustomed to having our specific needs met instantly by companies that seem to know who we are and what we want from our experience. Why should insurance be any different?
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