InsurTech tapping new personal data sources to warn clients of risks

Preventing people from being caught in a hurricane or tourists from being kidnapped are some of the radical new ways InsurTech companies could be helping their customers in the near future, according to Axa Strategic Ventures general partner Imran Akram, in a research interview with FinTech Global.

Smart implementation and monitoring of new, widely-available data sources is at the heart of potential developments in InsurTech, and finding new ways for insurers to help customers by predicting risks is something Axa Strategic Ventures general partner Imran Akram has a close eye on.

He said, “I think the biggest thing is going to be the breadth of data that gets used to help price risks. So not just you sitting down in front of me and describing your lifestyle and so on, but also having some continuous monitoring.” He added, “In health for example, getting access to your step tracking from your mobile phone, or how often you go to the gym and then a set of this information will help people with measuring and reducing risk.

“So insurers who are there have an incentive that is in line with the policy holder to try and reduce it. Getting you to exercise more, drive more safely, or avoid spots where tourists get kidnapped and so on, and I think that is still evolving, but that’s definitely something that is going to change a lot over the next five years, where you’ll be somewhere and your insurer will alert you a hurricane is coming, before something happens.”

That monitoring could also be extended to keeping a watchful eye on customers’ financial interactions, with software automatically taking action for potentially risky transactions. Dealing with a company in another country where the counter-party is unknown, for example, could see insurers jump into the work flow to stop those firms having to worry about potential dangers. That guardianship could also be translated down to a more consumer level, such as buying a bike or TV set, by giving an option to automatically protect it or extend its warranty.

Late last year the company led the $20m Series B investment into InsurTech company One Inc. The company is a SaaS-based operating system for insurance businesses, helping to combine core insurance software functions like policy administration, rating and billing with data analytics.

Akram said a lot of insurers do not tend to have their own internal processors and information integrated, so when data is compiled it is all held in different locations. This means information gathered through marketing and customer acquisition is kept separately to data collected from questions asked during the onboard process or through ongoing interactions. Compiling this data in one place helps insurers to predict against potential risks.

With the whole network connected it allows information to be pulled on easier. He said, “If you start seeing theft of more Ford Focus’, it immediately is alerted from claims to the rest of the team, so you can see how the risk profile has changed, and feed it directly back into the marketing.”

Cybersecurity and InsurTech’s potential partnership

InsurTech is becoming harder to define outside the traditional insurer with its version of data sets and pricing models, but there is a lot of shifting in the market, Akram said. This development has led to the sector becoming more intertwined with other sectors like data platforms, customer communications technology, marketing technology and cybersecurity. This has helped the sector move away from the “initial noise, down into the stuff, kind of under the hood, where people are really making a difference in the way things are done.”

After a four-quarter slump in the number of deals and their values from $630.4m in Q1 2016, the deal value has rocketed back up to $822m for the last quarter, but across fewer deals, according to data by FinTech Global. While the number of deals has still gone down this has been weighted by several high number deals with the biggest being a $230m investment into Gryphon.

With the recent series of ransomwares and hacking attacks, cybersecurity has become a key area of focus for the firm. Akram said, “As consumers and enterprises have steadily put more of their value in their IT systems and integrating with many more external systems, or employees’ phones, tablets and so on, that is one big area of focus where we are looking at investment opportunities.

“I think ultimately it’s another one where the insurance proposition makes a lot of sense. You can do what you like to protect yourself but in the end if a hacker really wants to get after you they probably can and it can have a big impact. So it makes sense to have an insurance product wrapped around that and there is sort of various conversations going on at the consumer and corporate level to improve that.”

He added, the whole InsurTech sector is based on the potential risk of something bad happening and trying to prevent this is a big aim. With people being easier to get through to with phones and computers it’ll be down to predicting the risks, either avoiding a hurricane or a potential computer hack. For example, an insurer telling its client of the vulnerabilities that are exposed to a hacker. While cybersecurity is a natural partner there are a lot of other insurance products which could expand across sectors.

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