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InsurTech may seem like it’s just a buzzword, but it’s actually an important part of the overall insurance industry. What is InsurTech exactly? “It’s the technology that lies behind the creation, distribution, and administration of insurance business. Smartphone apps, wearables, claims processing tools, online policy handling, and automated processing are all insurtech,” explains Arrk Group, an IT services company.
That means that everything from technology that enables customers to submit claims through their mobile devices, to artificial intelligence (AI) that can be used to analyze customers’ likelihood of renewing their policies, could fall within the InsurTech umbrella. Sometimes InsurTech companies resemble traditional insurers and have their own insurance customers, but they were built with more of a digital DNA.
But that’s not to say that InsurTech needs to be viewed as a threat to the insurance industry. While technology is reshaping the insurance industry to some degree, insurance agents and carriers often work together with InsurTech firms. Sometimes that involves collaborating with companies, other times it means investing in InsurTech startups. Or it could simply mean using InsurTech solutions to meet evolving customer preferences.
“There are many reasons insurance companies are seeking out partners in insurtech and other technology areas…successful partnerships often focus on persistent business needs: to help cut costs, increase revenues, or improve customer experience,” says KPMG.
Gaining a deeper understanding of what InsurTech is and how insurance agents can leverage it can help you become more of a digital insurance agent. As a result, you can boost insurance lead generation, increase operational efficiency, improve customer experience, and more.
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InsurTech may be a specific subset of the overall technology industry, but there are still many different categories within the sector. One way to break down InsurTech is to look at how different solutions support the many types of insurance segments, such as:
Some InsurTech solutions support commercial insurance agents and/or can be used directly by business owners to purchase policies like professional liability insurance. Others help commercial insurers implement the digital interactions that clients have become accustomed to in their personal lives, such as being able to compare pricing online, rather than having to wait for a proposal over the phone.
“Large [commercial] incumbents lag behind because the complicated nature of underwriting and claims often requires human judgment and interaction, transactions are sometimes low volume and bespoke in nature, and legacy IT systems and processes make the transition resource-intensive and complex…Enter insurtechs,” says McKinsey.
Health insurance is another area ripe for technological advances. Both individual insurance policyholders, as well as companies that provide health insurance on behalf of employees, often have to jump through hoops to understand their coverage and manage policies. InsurTech can help in many ways. For example, GoHealth uses machine learning to help match people to policies.
Some InsurTech companies like Hippo directly sell homeowners insurance policies to customers and provide tech like smart home devices to help reduce the need for claims. Other InsurTech solutions support more traditional insurers, such as using computer vision technology to help them assess properties.
Another way to look at InsurTech solutions and to better understand them is to consider the business areas they support. Some InsurTech companies support insurers across different categories, such as helping with both homeowners’ claims and commercial property claims. So, it can be useful to look at the various facets of both internal and customer-facing operations and see how InsurTech solutions can improve these areas.
Some examples of categories that InsurTech supports include:
Some InsurTech solutions are built to help insurers enhance their digital marketing capabilities and get in front of more potential customers so they can improve insurance lead generation. Wheelhouse, for example, helps commercial insurance agents create custom landing pages and more easily enable policy quoting through channels like social media.
Insurers have to determine whether they can underwrite policies for potential clients, which can create some friction. One on hand, insurers want to gain new clients and provide efficient service. On the other hand, they don’t want to rush decisions and take on too many risky clients. Fortunately, a number of InsurTech solutions have emerged that can help increase the speed of underwriting.
“By using AI applications such as intelligent data solutions, [insurers] could gather and organize structured and unstructured data from a wide range of internal and external sources. The data could then be aligned according to the requirements of the insurers’ underwriters so they could quickly assess its importance,” says Accenture.
Today’s insurance customers, from business owners to homeowners, often want to be able to shop for policies and communicate with insurance agents online. InsurTech solutions can help traditional insurance agents gain these capabilities, such as by adding policy quoting capabilities to their website, automating email sequences to welcome new customers or providing quick answers to customer questions through AI-enabled chatbots.
Once insurance agents have a good understanding of what InsurTech is, it’s important to be able to implement InsurTech solutions in a way that drives their business forward. Sometimes, however, insurance agents, as well as InsurTech companies themselves, get too caught up in the allure of new technologies, without finding relevant use cases for InsurTech.
In recent years some InsurTechs have recognized how others have gotten too caught up in what’s theoretically possible rather than what’s practical, explains Willis Towers Watson. “They have acknowledged that the underlying technology is innovative and has great potential, but they have not lost sight of the end goal: delivering business outcomes for themselves and their partners.”
So, when thinking about how your own insurance business can implement these solutions, consider specific goals and assess whether certain technologies can help you get there. For example, you may want to:
Improve insurance lead generation:
Evaluate InsurTech solutions in areas like marketing and customer service that can help you reach prospects and show them that you’re a customer-friendly, efficient, digital agency.
Speed up claims processing:
For some insurers, adding InsurTech solutions that use AI to evaluate claims may help. For others, simply leveraging technology that frees up time, like APIs that connect information between different finance systems, can be enough to help you have more time to process claims so clients don’t have to wait as long.
While trying to improve your marketing, you might increase the amount of customer data you collect. Or you might be using data more to analyze claims, assess renewal probabilities, etc. However, you need to keep privacy laws and other regulations in mind. Some types of InsurTech, or related RegTech solutions, can help you stay compliant.
Ultimately, when implementing InsurTech solutions, it may be useful to start by testing out a solution as an add-on to your capabilities. From there, you can consider additional options, such as partnering with InsurTech firms on more of an integrated level to build a more digital-minded insurance business.