The term Fintech has become part the lingua franca in these parts. The IT industry that is. But while investors are flocking to the insurtech sector it doesn’t quite have the same ring as fintech.
But digital technology in the insurance sector has massive potential. Not only is the insurance sector traditionally lethargic in terms of technology, but the very nature of insurance, being a very personal thing, lends itself to personalisation. And this is exactly where start-ups developing apps can help.
Look at indemnity insurance. This is a policy that is tailored to suit a particular situation. For example you might share an access gate with a neighbouring house and while there hasn’t been a dispute in 50 years if somebody buys your house they might want insurance to ensure that in the event of a dispute they are covered financially.
Now imagine being able to create policies quickly via a mobile app. You could have similarly bespoke insurance for all manner of things and buy it at the last minute. Then there are possibilities around using things like sensor technology to send information to an insurer about things like how somebody drives. The safer they drive the lower the insurance. Imagine, people being offered rewards to drive safely rather than being threatened with fines if they drive dangerously.
But will that be too big brother like? Well it seems that customers are up for it. A survey of 8000 people globally, carried out by Salesforce owned MuleSoft, found 62% of 18 to 34 year olds said they would be happy for insurers to use their internet of things (IoT) and social media data if it meant lower premiums and a more personalised service.
So there is clear demand but insurers are currently struggling to provide what customers want. As a result the opportunity for insurtech companies to win business in the sector is huge.
For example 58% of consumers believe insurers provide a disconnected experience and 56% would consider changing insurer as the result of receiving a disconnected experience. In the 18-34-year-old age group a massive 61% would consider changing insurers for a more connected experience.
The fact that the younger generation seem to trust insurtechs with their data could mean one of the hurdles to their adoption might cease to be a hurdle in a few years’ time. According to the World Insurance Report 2017 from Capgemini and banking and insurance association Efma, which revealed that 31% of people already receive insurance products through insurtechs, there was less trust of them than traditional players. While 39% trust traditional suppliers, only 26% trust the new arrivals.
Jerome Bugnet, Emea client architect, at MuleSoft said: “The insurance industry is facing major upheaval and disruption with the prevalence of online aggregators and more recent rise of insurtech companies. If they want to remain relevant, insurers need to be ready to engage on their customers’ terms, using modern channels and technologies such as messaging platforms and chatbots. They also need to find new and innovative ways to create more personalised offerings that drive better experiences for their customers.”