The word “insurtech” describes technology innovations aimed at amping up the efficiencies of the insurance industry model. A marriage of “insurance” and “technology,” the concept hinges on the idea that the business of insurance is poised and ready innovation and disruption.
At the core of the idea is an insistence on exploiting gaps in the business that larger insurance concerns may not have sufficient incentive to explore like creating customized policies, building “social” insurance and analyzing the enormous cache of data produced from internet-enabled tools.
One of the oldest business activities still existing, insurance has always been the province of wealthy interests with huge resources and a deep, technical understanding of the market. Actuarial table data is used to predict, with relative certainty, that policies will ultimate be profitable for a company.
Insurtech takes on the minutiae of data and analysis to fine tune groupings of risk with an eye toward ultimately price products competitively to a razor edge.
There are also insurtech startups focused on implementing Artificial Intelligence to automate brokerage tasks discover the ideal mix of policies for each individual consumer. Some apps are developed to fold policies into a single platform where they can be monitored and managed on a grouped level. Some concepts seek to treat insurance coverage as a streamed, on-demand commmodity. which can be constantly recalibrated in terms of pricing and policy detail.
Standing in the way of adopting such technologies is the fact that insurance is one of the single most complex, and regulated, industries in all business. Deep layers of jurisdictional and legal oversight mean attempts to streamline and innovate are fraught with peril and risk.
One attempt to take on the task of bringing the insurance industry into the digital age is The Global Insurance Accelerator. It’s a “mentor-driven business accelerator designed to foster innovation in the insurance industry by supporting startups targeting the global insurance industry.”
The group is focused on aiding startup companies intent on building solutions to support the insurance industry, and it provides networking support, seed funding and up to 100-days of on-site support and time on stage at the Global Insurance Symposium. Participants are ultimately able to strut their wares in front of hundreds of top industry executives.
Investors are generally insurance carriers and the mentor group is culled from insurance company executives.
Brian Hemesath, the managing director of the Global Insurance Accelerator (GIA), says that since the formation of the group in 2015, the GIA selects six applicants to participate in the 100-day program. The successful applicants then develop their business models to serve the insurance industry, and each startup receives $40,000 in seed money to take on the projects.
On April 26 of this year, the startups will present their business plans during the Global Insurance Symposium in Des Moines, IA. This year’s “demo day” is the result of initial funding from seven Iowa-based insurance companies and 10 investing insurers.
“We’ve garnered a lot of interest in what we’re doing,” Hemesath says. “The companies are realizing that our program is not only really easy to support, but we’ve been able to attract some really great talent.”
One of the startups, InsuranceMenu, has built a tech platform to distribute employee benefits for the small business market. Hemesath says InsuranceMenu has been in operation for nearly two years and already boasts a base of paying customers who generate real revenue.
“Insurance is a complicated industry with a lot of stakeholders,” says Nabil Aidoud of InsuranceMenu. “(The GIA has) done an amazing job of bringing these different stakeholders together who traditionally don’t collaborate that well, and have created this little sort of mini ecosystem built around attracting startups and innovating around that.”
And GIA isn’t the only pipeline generating insurance innovation.
Innovations are coming from all points around the globe and offering fresh new takes on the insurance business.
Startups like German concern Friendsurance are conceptualizing and offering “online P2P insurance” which makes use of social network data to connect with long-established insurance companies. The company allows customers to connect and build their own individual insurance networks. The founders say the platform makes it possible to lower the annual insurance premiums of their members – by up to 50%.
Another such innovator, insPeer, is a French startup which lets users share insurance “deductibles” with their friends and family members and allows those users to select the group they target to share those deductibles.
Come companies are developing hardware and software solutions. One of those, Metromile, built a device to capture mileage data and then use that date to determine how much a person should pay for their car insurance policy. Their free plug-in device turns any car into an “insurance smart car” via their smartphone app, Metronome, which is capable of providing diagnostic information to offers tips which can help a user tune their daily commuting ritual. The Metromile functions also include a concept they call pay-per-mile insurance.