While the disruption being strewn in the banking sector by the fintech industry catches the headlines, their counterparts in the insurance sector are helping traditional businesses keep up with changing demand.
Not unlike the fintech revolution the insurtech industry has seen the rapid emergence of startups using digital technology to offer consumers insurance products that suit them.
Also analogous with the fintech industry is that the traditional players are using the disputers to differentiate in product development, rather than attempting to compete.
Two announcements this week reinforce the importance of the insurtech ecosystem to traditional insurers.
Allianz Insurance, for example, is now offering freelancers a new insurance app that enables them to buy flexible cover that is charged by the second, with customers only paying for what they use. Policies can be bought in a few minutes, and all claims and policies can be handled online 24 hours a day. With income less predictable in the freelance world flexibility is attractive.
But Allianz is not doing this alone. Allianz has partnered with an insurtech, known as Dinghy, to offer business insurance for freelancers, which it describes as insurance as you work, offering the ability to increase and decrease coverage via a mobile phone and pay per second. The app based product enables freelancers to stop payments when work dries up or reduce payments when work levels are low.
As the number of freelancers increases, demand for business insurance is changing, and Allianz doesn’t want to miss out. Dinghy will be the front end through its app with Allianz underwriting policies.
Read more about insurance industry IT
- Insurers are held back from digital transformation by legacy systems, but insurance-focused IT startups offer them hope.
- UK startups focused on technology for insurance companies saw capital investments double last year.
- Insurance companies are investing in digital innovation, with a new breed of leaders formalising enterprise strategies.
- Insurance companies in Europe are under threat from companies outside their sector as they fail to keep up with digital developments.
Nick Hobbs, director of broker markets at Allianz Insurance, said: “We recognise that the world of employment is changing rapidly and our work in getting to this point with Dinghy has re-emphasised that evolution. With insure-as-you-work solutions expected to become more prevalent, partnering with Dinghy represents a great opportunity for Allianz. We are looking forward to sharing our expertise and providing flexible business insurance solutions for this fast-growing sector of the economy.”
Also this week BMW’s financial services arm, which offers its customers car insurance in the UK, has announced the evolution of its relationship with insurtech Wrisk.
The two companies signed a contract a year ago, which meant through Wrisk, customers could buy and manage multiple types of insurance in a single plan. It replaced the traditional way the company offered insurance, which involved lots of manual form filling and other processes for customers and dealers.
But it was the future potential of the relationship with Wrisk that most appealed to BMW. This is now bearing fruit with BMW’s latest insurance product, developed with Wrisk, offering customers that buy Minis three months automatic insurance that can be continued on a subscription basis after the initial free period.
Philip Kerry, sales and marketing director at BMW Group Financial Services, said: “As car ownership models shift and consumer purchasing behaviours continue to rapidly evolve, we understand that innovation is vital to deliver a delightful customer experience.”
Wrisk’s insurance industry backer is Munich Re which provides the insurance finance. The company’s first prototype, in sketch form, was created in 2015.
In 2017 BMW Financial Services completed its first Innovation Lab division, which aims to find innovative technology for the fintech sector. One of the first graduates was Wrisk, and its platform was developed while he was on the BMW startup programme where they received mentoring.