New, tech-savvy players are entering the insurance market, bringing all of their disruptive, opportunity-laden strength with them. They will transform the playing field for incumbents, similar to what happened in banking with the introduction of financial technology businesses.
“Insurtechs” are technology-driven insurance companies that use new technologies to provide coverage to a younger, more technologically savvy customer base. While insurtechs have yet to make significant inroads into the industry, they are rapidly expanding and are poised to take a significant part of value pools in the coming years.
New Tech Trends in the Insurance Industry
Let’s have a look at some of the technology trends that will have an impact on the future of the Insurtech industry in the coming years.
Data-Backed Personalization: Insurtech companies are relying more on the collection of personalized customer data to better understand their customers’ interests. Insurance companies are attempting to give personalized advice, the proper products, and customized pricing using data acquired from IoT devices and smartphones.
Personalization allows customers to have great experiences while receiving products and services that are tailored to their unique needs. The objective is to place clients at the center of everything they do.
Usage-Based Policies: The rise of usage-based policies is one of the most significant trends in the insurance market. It is predicted that the popularity of short and very short-term insurance that needs to be triggered swiftly will continue to grow over the coming years.
We’ll also see the rise of dedicated applications that make it easier to activate restrictions depending on usage patterns. For example, one could purchase insurance for a sporting event or a vacation.
Robotic and Cognitive Automation: The two extremities of the intelligent automation gamut are cognitive automation (CA) and robotic process automation (RPA). RPA, which uses easily programmable software bots to perform straightforward tasks, is on one extreme of the scope. Cognitive automation, on the other hand, is capable of emulating human comprehension and activity.
While robotic process automation (RPA) is the foremost step on the journey to automation by any industry, cognitive automation is anticipated to help the industry embrace an approach that is more customer-centric by leveraging different technologies and algorithms to bring intelligence to information-intensive processes. As a result, R&CA comprises a powerful combination of automated talents, particularly RPA and CA.
R&CA has a lot of opportunities to help with the processes in the insurance business. Some of its applications include Claims Processing, Data Entry, Policy Management Operations, Regulatory Compliance, and Underwriting.
Data-Driven Insurance: Despite the fact that data has always driven the insurance sector, advances in technology indicate that there is more to gain from big data especially by insurers. Companies can modify their existing insurance policies, reduce risks, and improve the accuracy of their calculations by leveraging important data insights.
A few examples of how insurance companies are utilizing big data include; Pricing, Gaining insights on customers’ healthcare and health history, and shaping the behavior of policyholders.
Smart Contracts: Lines of code that are kept on a blockchain are known as smart contracts. When certain preset criteria are met, these contracts are capable of executing or enforcing themselves. By the end of 2023, the market for smart contracts is estimated to be worth $300 million.
Smart contracts can help the insurance industry because they can mimic traditional legal agreements while also improving security and transparency. Furthermore, because these contracts are automated, businesses will save time processing paperwork and rectifying inaccuracies in written documentation.
Israeli Startups Defining the Insurtech Space
Israel is one of the world’s most technologically advanced economies, with innovation at its core, and it’s positioned to become a global center for Insurtech innovation. In fact, a few startups that have the potential to revolutionize the industry have been established in the past few years.
One of these startups is a prominent provider of on-demand insurance that is more economical, efficient, and adaptable than traditional insurance models for freelance, flexible, and temporary workers. The startup aims to be the global authority on on-demand insurance, by delivering ingenious usage-based solutions to both digital platform-based gig enterprises and direct end-users. This company has been backed by global insurers, collaborates with new mobility, the gig economy, and other disruptive platforms to provide customized on-demand insurance coverage and a plug-and-play insurance solution to consumers.
As a result of the surge in cyberattacks, particularly ransomware assaults, another startup’s market for cyber insurance in the United States is fast expanding. Even though traditional insurance companies still control the majority of the market. This startup covers over 10,000 mid-sized businesses in the United States, and its uniqueness stems from the fact that it is both an insurance and a cybersecurity firm.
Another startup that works by turning insurance parameters into real-time business insights with powerful analytic capabilities and actionable information, is seeing rising global demand. This startup delivers an insurance platform that may increase policy sales, earnings, and overall efficiency through new analytical tools, data analysis, and business insights that are all available in real-time. The system can provide comprehensive visibility into the customer journey, as well as insights, to assist enhance profits, sales, and productivity by combining front- and back-office data and activities.
One can say that the COVID – 19 pandemic has accelerated the insurance industry’s migration to digital. Insurtechs are now aiming to exploit inefficiencies across the insurance value chain through a digital revolution. Insurers possess critical traits such as cash, distribution networks, skill, vast knowledge, and storage of expertise that isn’t available in other industries. It’s becoming increasingly crucial to be able to effectively leverage those assets.
Israel is home to some of the world’s top Insurtech companies. As we are starting to see more innovative startups in the industry, it is clear that the Israeli Insurtech scene will continue to grow as a result of Israeli entrepreneurs’ talent, desire, and drive. And, by exploiting technological capabilities and advantages in their business use cases, these start-ups will become increasingly sophisticated with their solutions.