WHAT IS INSURTECH?
A spin-off of the word ‘fintech’, ‘insurtech’ refers to the application of new innovations and technology that are dramatically disrupting the insurance industry, including apps and artificial intelligence.
The aim of insurtech is to provide new tech-driven products and services that deliver savings and efficiencies when compared with the traditional insurance model. Through insurtech applications, new streams of data can inform consumer risk profiles and allow insurers to price premiums according to observed behaviour
HOW DID INSURTECH START?
Insurtech was born as part of the global start-up revolution, through which innovators use technology to solve problems or address pain points within an industry.
These start-ups are agile in an industry in which some traditional players have become too big, too slow and encumbered by legacy systems. Friendsurance was among the first start-ups in the insurance market, launching a peer-to-peer concept in 2010 whereby a small group of people could support each other in the event of a loss.
WHERE DOES IT FIT WITHIN THE INSURANCE SECTOR?
Insurtech is part of a larger interdependent ecosystem, incorporating insurtech start-ups, incubators, accelerators, investors, regulators, government and all incumbent players that sit within the insurance value chain. Increasingly, start-ups are collaborating with the existing industry leaders.
Insurtech is big business. American tech company CB Insights says total funding to insurance start-ups last year hit US$1.69 billion. More than 50 per cent of insurance tech deals in 2016 went to US-headquartered start-ups, with the UK, China and Australia among a diverse spread of companies embracing the trend.
Professional services firm PWC expects the rise of new ride- and car-sharing business models, or similar sharing economics such as Airbnb, to create demand for new insurance solutions around liability and personal injury. Then there is robo-advice, whereby new models will emerge on insurance needs as automated advisors take advantage of advanced analytics and AI.