What is Insurtech?

Toby MacLachlan, 27 May 2021

What is insurtech?

Insurtech is a broad term to describe any of a new wave of technologies and companies that are actively trying to digitise insurance. Insurtech can come in many forms, but it is united by the focus on bringing digital benefits – such as automation of processes, online customer experiences, and machine learning – into the insurance space.

Examples of insurtech companies in the UK
Zego – https://www.zego.com/

Percayso – https://www.percayso-inform.com/

Wrapper – https://www.wrapperinsure.co.uk/

For a general overview of some of the most exciting UK insurtech’s visit: https://insurtechuk.org/

Why invest in insurtech?

Insurance is an area that has historically been slow to adopt technology. Industries like social media, travel, and fashion have stormed ahead, where financial services and insurance have lagged behind. Insurance is nonetheless a massive global industry with in excess of $5 trillion a year spent within it per year. The last 2-3 years have seen a considerable upturn in investment in this sector. Success stories of companies such as Lemonade and Hippo in the US and Zego in the UK have shown investors that there are sizeable returns to be made in Insurtech.

Willis Towers Watson 2020 Insurtech report

What are the benefits?

All participants in the insurance lifecycle benefit from quality Insurtech.

Insurers stand to benefit through better insights into their products through data access, enrichment and analytics.

Brokers can renew their focus on customer service when decent insurtech automates many of their manual processes.

The end customer is more likely to deal with and stay with insurtech-led brokers because their online experience is more pleasant, simpler and integrated.

Insurtech and AI

AI is a buzzword in many industries, and in insurance we can make use of AI in a number of ways. In truth the industry has some way to go before AI (or more likely Machine Learning – ML) is a backbone of all parts of the process. ML is already used by actuaries, but only used to a limited degree so far in customer-centric interactions such as next-best-step decision making and UX enhancements.

Insurtech is blazing a trail that is disrupting the old guard of insurance and the plethora of recent successes and scope for improvement in the market in general can only mean more interest, investment and innovation in this space over the coming years.

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