While insurtech is staunch innovator of the insurance industry, there are also some challenges involved as well. The term has been up in recent Google searches, with searches doubling in the last six months. Insurance technology makes life easier by finding savings in a current insurance industry model, as well as looking for ways to be more efficient. Inspired by the term Fintech (financial technology), insurance technology has begun to explore options such as ultra-customized policies, social insurance, and the utilization of internet-enabled devices to dynamically price premiums by observed behavior, according to Investopedia. Insurance technology has taken off and will only continue to grow as the years go on. The market is massive, and it’s only going to take off from here. All in all, it’s about making a company profitable and policies affordable, and using data can help us find out how to properly price out a product. These are the challenges and innovations of insurtech:
There are a lot of upsides besides better pricing models. The use of artificial intelligence (AI) has been a game changer in the industry. It’s one new way of working with a broker to make sure that someone has the best possible policy written for them. There’s also interest in the usage of apps, which could effectively create on-demand insurance for situations like when borrowing a friend’s car. The adoption of a peer-to-peer model can also be used to create customized group coverage and incentivize positive choices through group rebates.
While many of these innovations have been desperately needed, they’ve also come with their own sets of challenges, making incumbent leaders reluctant to adapt. Companies play on caution, meaning that many don’t want to work with what comes with insurtech. Less than 14 percent of businesses are involved in the works of Fintech, according to PwC, with just 43 percent stating that Fintech is at the heart of their business. Not a lot of people are ready for the insurance technology jump. It’s an uncommon ground that’s highly unpredictable, and can change at any given time. This industry is stable and isn’t looking for any new, immediate change. That’s why it’s so shaky coming in as an insurance technology startup. Many startups still require the assistance of a traditional broker to take over the task of underwriting and to manage catastrophic risk. It’s going to take some time, but the startups will eventually warm to the hearts of big players in the insurance industry. With refined models and a user-friendly approach, incumbent players in the industry might take the bait. Startups just have to get insurance companies interested in investing in them, which is the biggest challenge.
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (201) 847-9175 to speak with one of our professionals.