What is Insurtech in the Insurance Industry?

TechWithPine

July 2, 2024
by
Team Pineapple

Demystifying Insurtech: How Technology is Transforming Insurance

For many, insurance can seem complicated or tedious. 

While it might not be the most riveting topic, recent innovations are shaking up South Africa’s insurance landscape in exciting ways. 

Innovations like the emergence of different insurtech companies are at the forefront of this global transformation.

Insurtechs, such as Pineapple, aim to simplify, speed up, and potentially make insurance more affordable by harnessing technology to offer a more streamlined and customer-centric experience.

Content:

  1. What is Insurtech?

  1. How is Insurtech Changing the Insurance Game?
    1. Benefits of Insurtech for Consumers
    2. Challenges and Considerations with Insurtech

  1. The Future of Insurance with Insurtech

  1. How to Get Started with Insurtech

  1. Conclusion

What is an Insurtech?

Insurtech refers to the innovative use of technologies to improve and modernise various aspects of insurance, namely current, and traditional insurance models. Similar to fintech, a portmanteau of the words ‘financial’ and ‘technology’, insurtech is the combination of ‘insurance’ and ‘technology’. 

Definition of Insurtech or insurance technology

The word ‘insurtech’ is also used as a synonym for startups offering new products or delivering traditional coverage faster and more efficiently than traditional insurers.

Most insurtech companies and startups envision a future where data empowers smarter decisions, technology streamlines processes, and personalised insurance solutions take centre stage.

Their emergence started around 2010 as an offshoot of a similar endeavour in banking: fintech. Insurtech most consistently refers to the use of apps, wearables, big data, machine learning, and other transformative technologies to improve processes across the insurance value chain.

How is Insurtech Changing the Insurance Game?

The rise of insurtech startups has led to innovation that’s challenging traditional players to adapt to the imminent wave of change. Insurtech aims to do away with traditionally static factors like age and location when assessing your risk. 

Instead, telematics and other data collection methods will take their place. Their modernised methods allow insurers to create personalised risk profiles with the goal of lowering premiums for responsible drivers. 

Here is a small list of how insurtech companies are changing the insurance industry:

  • Through data-driven risk assessment.
  • By introducing digital transformation.
  • Refining underwriting.
  • Streamlining claims processing.
  • Personalising policies.

Benefits of Insurtech for Consumers

There has been an explosion of sensors and connected devices during the 21st century. IoT (Internet of Things) devices, like telematics in vehicles and smartphones, allowing insurers to collect real-time data on driving behaviour. 

Insurtechs analyse this data to improve premium pricing through an improved understanding of risks. 

The rise of insurtech offers the following advantages for insurance customers:

  • (Potentially) Lower premiums
  • Convenience 
  • Efficiency
  • Transparency and Control

Overall, an insurtech’s pipeline dream is to foster good driving behaviour and reward it with lower premiums and benefits.

The digitisation of insurance processes is influenced by insurtech’s need for efficiency.

Digital transformation through the use of automation tools can reduce manual human intervention. Insurance professionals are then free to focus on complex issues that require personalised client interactions.

The digitisation of insurance also means customers can access insurance products directly from the comfort of their homes or anywhere in the world. 

Should you need to speak with someone, intelligent AI and bots are able to assist outside of working hours to facilitate the 24/7 narrative from anywhere, anytime.

Insurtech companies also aim to refine the underwriting process. 

Underwriting is when an insurer reviews an individual's profile, assesses their risk profile, and offers them an insurance package that includes coverage. Traditionally, underwriting is a time-consuming and manual process involving a lot of paperwork and manual data entry.

However, with technologies like machine learning algorithms and artificial intelligence, underwriting can be automated and completed much faster. 

The same can be said about the claims process.

Many policyholders are weary of the insurance claims process as, historically, they have a reputation for being slow and bureaucratic. This is because each claim has to be manually reviewed.

Insurtech companies are changing this narrative by providing a digital solution. This allows policyholders to submit claims online, upload documents and photos via their phones, and track their claims progress in real time.

And lastly, tech advancements in insurance have allowed the creation of personalised insurance policies. 

Insurtechs allows insurers to offer customised coverage options uniquely tailored to your specific needs. This coverage empowers insurance consumers to choose a policy best suited to their driving habits and the type of vehicle they drive.

Overall, by wielding technology, insurtech is making informed decisions around enhancing risk management, and improving overall operational efficiency. 

Challenges and Considerations with Insurtech

As technology advances, data analytics' role in the insurance sector is likely to evolve, with increased emphasis on real-time data, artificial intelligence, and machine learning techniques in fraud detection.

However, a few concerns surrounding insurtech companies have emerged, namely data privacy, competition and a rigid industry. 

Sharing data, especially through the use of telematics devices, can be a concern for privacy-conscious consumers. Therefore insurtech companies have the task of clearly outlining what data is collected, how it's used, and exhaustive measures taken to protect a client’s privacy.

Insurtechs also face the challenge of competing against longstanding traditional insurance companies. This is because established insurance companies have significant resources and brand recognition.

Their reputation means the public can trust that they’re a reputable company, not just a new company that popped up overnight.

Lastly, insurtechs may be a breath of fresh air in an archaic industry, but they face obstacles due to heavy regulation and public scrutiny. 

Unlike some industries, where merging speed and satisfaction is encouraged, insurers are legally required to protect customers from privacy breaches and bias.

Thankfully, due to the vast amounts of sensitive data, cybersecurity measures are increasingly focused on protecting customer information from cyber threats and data breaches.

The rise of insurtech within the insurance industry.

The Future of Insurance with Insurtech

The continued sophistication of technologies like artificial intelligence and big data means we can expect even further advancements in the insurance sector.

As previously mentioned, the insurtech invasion drives significant changes by improving efficiency, personalising offerings, and enhancing the overall customer experience.

Automating tasks like policy management and claims processing potentially leads to quicker turnaround times, from getting a quote to receiving a claim payout.

Insurtech companies also aim to streamline the insurance experience by eliminating unnecessary paperwork, making things more convenient.

Just picture yourself with the freedom to manage your policy, pay your premiums, and even register claims, all from a user-friendly mobile app!

How to Get Started with Insurtech

Getting started with insurtech is mostly a simple and hassle-free process, especially when compared to traditional insurers (no shade). 

Simply start by researching reputable insurtech companies that specialise in the type of insurance coverage you require. 

For instance, someone looking for insurtech providers offering car insurance should look for providers that leverage data-driven risk assessment. Additionally, find out if they offer personalised coverage options tailored to your driving habits and car type.

Pineapple is such a company. 

Founded in 2017, and launching our motor coverage product the following year, we’re a proudly South African insurtech startup with offices in Gauteng. 

Pineapple uses smartphone camera technology and AI (artificial intelligence) to streamline the insurance experience.

Click here to experience the insurtech difference by getting a comprehensive car insurance quote in minutes.

While researching South African insurtech companies, prioritise online reviews, as these can give you an idea of a company’s credentials. Look for companies with strong reputations, established track records, and a focus on customer satisfaction.

You can use platforms like Hellopeter or Google reviews. The latter is extremely trustful as it requires reviewers to be verified and prohibits multiple reviews per business to a single email address.

Remember to consider companies endorsed by reputable industry organisations like the FSCA (Financial Services Conduct Authority), the SAIA (South African Insurance Association) or those receiving positive recognition in the Insurtech space.

Alternatively, you can reach out directly and enquire about specific questions you might have. 

Conclusion

Despite being around for several years, insurtech is still relatively new and evolving in many ways within the insurance industry. The innovative approach leverages technology to create a more data-driven, personalised, and ultimately, customer-centric experience.

Gone are the days of one-size-fits-all policies.

Insurtechs offers customised options that better suit your specific needs and assess risk more accurately, potentially leading to lower premiums for some drivers.

This innovation also allows you to manage your insurance policy on your terms, anytime, anywhere.

By exploring insurtech options (and choosing a reputable provider like Pineapple), you can unlock a new world of possibilities.

Ready to get started? Please refer back to our "How to Get Started with Insurtech" section for valuable resources and tips!

And about that car insurance quote… click here for insurance made with you in mind.

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.

Team Pineapple

Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.

Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.

*We say they’re the finest because we want them to keep writing for us!

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Disclaimer

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

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