InsurTech has the potential to offer new revenue streams and to even help restore the public perception of the insurance industry.
The insurance industry is no stranger to using the latest technologies. This has given rise to a new sector dubbed insurance technology or InsurTech. The innovators in this industry are constantly utilising blockchain, artificial intelligence (AI), natural language processing and other new solutions to provide better services.
By doing so, InsurTech innovators are not only able to help consumers find more personalised coverage, but also to empower insurers to streamline and accelerate claims processing as well as, in some cases, even reunite clients with lost property. Clearly, technology has provided a wealth of opportunities for the industry.
One of the people who has had first-hand experience of this new technological revolution is Stephanie Smith, chief operating officer at Allianz, the financial services firm and insurance provider. “I think the more exciting stuff is what you’re getting off the back of things like data and connected data, because it’s opening up new avenues,” she told FinTech Global.
As an example, she points at how insurers can leverage geospatial data to identify areas which are at high-risk of being flooded and how this enables personalised cover and better aversion to risk.
Several InsurTechs are already utilising this geospatial data in their offering. Tensorflight is one of them. The company provides an AI-powered platform combining geospatial imagery with machine learning algorithms to help insurers better understand their risks. It can account for building footprints, construction type, roof pitch, number of stories and more.
This does not mean technology can only help small segments of customers – collating publicly available information can, for example, reduce onboarding times for everyone. Not only is InsurTech providing customers with new services, but also easing their current interactions with insurance firms.
“By connecting data available in the public domain, you can make customers lives easier,” Smith explained. “So, we don’t have to ask them a suite of questions, you can draw information from public sources to make that process much slicker and much simpler.”
Moving beyond publicly available data, technology has become ingrained into our daily life and is still finding more ways to play a part in what we do. Most of these interactions with technology can be turned into data and used by companies. Putting aside the fear that everything we do nowadays relies on technology and is hording information on us, there are a lot of new personalised services available because of this.
Within the engineering inspection space, Allianz is using black boxes on wind turbines to help it take a more preventative position on risk. “By looking at how something is performing, you can actually stop someone having to claim because you can give them guidance up front,” Smith said. “So, I think that technology, proactive enablement piece is quite exciting as well.”
InsurTech could also help insurer work on their image, which is something they seem to be in dire need of. A recent study from YouGov claimed that 68% of Britons believe insurance companies would do whatever it takes to avoid paying out in the event of a legitimate claim. Another area of grievance from consumers tends to include complex language. Making use of data to create personalised and simplified experiences for consumers can help with this. For example, automatically collecting geospatial data after a flood or black box information from cars can quickly supply information of a potential claim. Not only will this ensure claims are paid out when needed but it will alleviate stress on claimants.
“I think it’s important to remind ourselves again of the fundamentals of why we’re here,” Smith added. “It’s about giving people the confidence so they can get on with their lives and look to the future,” she added. “That’s the bit that is core to what we do and that bit won’t change. But I think, if you look at the technology capabilities, that you’ve got to help speed up that engagement, make people feel more comfortable, more confident, take this preventative focus as well, using things like [the internet of things] and embrace those technologies. [In the future, insurance] will be more technically enabled, but will never be without the need for us to support our customers and provide a sort of an assisted service for them.”
Still, she points out that embracing and adopting new technology is not something that is done overnight. For Allianz, it has been a long process to welcome new innovations, which is understandable given the company is over 100 years old and have a widespread global presence. While this might have slowed the insurer down, it has not stopped it.
Allianz has made efforts to embrace new technologies. The insurance firm has even established a handful of investment arms which are taking a keen interest in the FinTech sector. One of these is Allianz X which has a total fund size of €1bn to invest into startups across the mobility, property, health, wealth management, data intelligence and cybersecurity spaces.
As an example, the firm recently invested into the German open source software platform SDA SE Open Industry Solutions. The company supports the digitalisation of businesses, enabling clients to integrate existing IT systems with new digital services. Through this, insurance firms can deploy new services quickly and bolster customer touchpoints.
Smith stated Allianz is looking for partners where it can couple its traditional skills around underwriting with the new thinking coming through the FinTech community.
Smith explained that partnering with new InsurTechs startups can help incumbents reengineer their customer interactions and create an environment and architecture which lets them put an interaction layer between the customer activity and the legacy systems.
“I think the challenge for all businesses is you don’t want to be a Lagarde,” she added. “You’ve got to get with a programme if you like you don’t want to be a Kodak where you sort of deny the fact that technology is changing and moving at an incredible pace. I think, as a leader in this environment, it’s getting the best balance between running the business day to day and investing in the future. And that is a not an easy balance to strike.”
Allianz’s efforts are a sign that the anxiety about the FinTech wave replacing traditional players has died and organisations are working together to evolve insurance. A few years back telematics was being heavily publicised as the new revolution of car insurance and it did change the segment, but in a niche way, not a dramatic overhaul.
Realising this co-existence could be why InsurTech has not witnessed the same crash as the dotcom bubble did. Investors interests have clearly been peaked, with more than $13.5bn being invested into the space since 2014, according to FinTech Global’s data.
Smith reminded insurance companies that their role is to make consumers feel safe, which is not always easy to remember as they face increasing regulations. “In order for us to deliver that service, we need to make sure that it’s hassle free and give them that security,” she said. “So, from my perspective, if you keep true to those core principles of why we’re here and what insurance is to do, actually, the opportunity that comes from, you know, tighter regulation or real focus on demand from our customer is all good and embracing that is really the key.”
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