Insurtech is one of those new words that few people know now but investors are getting crazy about it. Insurtech is going to replace all those lengthy phone calls with our insurance broker and the long walks coming back from his office having a pack of signed papers in our hands.
Insurtech firms are start-up companies that have as a target to reinvent a tired insurance industry that, in many cases, has lost the trust of its customers and faces serious challenges due to the global economic problems. In order to achieve this target, these companies are trying to use the latest technology in an effort to reduce costs and improve efficiencies through constant data analysis. Some of them have already presented new technology like wearables and sensors that helps them gather data and offers the right proposal for every need of their customers. Using this kind of tech could help to pass those costs savings to the customer’s budget.
Insurtech firms are the new players that are just entering the insurance market world. For now, the leaders of those firms don’t see themselves as direct rivals and disruptors of the regular companies that we all know but rather than enablers. Legacy insurance companies seem to share the same view and don’t see the start-up firms as competitors. They believe that there is a lot to be gained by each other’s diverse range of talents.
Jonathan Howe, UK insurance leader of PricewaterhouseCoopers, has commented that a cooperation between the old and the new firms is not only to lead to a serious cost reduction but it will help all insurance companies to build and retain a new and trusted relationship with customers that is very much needed at this point. A research in 2016 by the London accelerator Startupbootcamp Insurtech and PwC showed that 3 out of 4 incumbent established insurers are ready to listen to new ideas and solutions and use them if found appropriate.
A research from Accenture that was published in 2016 gave a clear indication of how much importance do investors give to the growth of this new economy sector. In 2014, the total amount of investments was around 800 million dollars and in 2015 it reached 2.6 billion dollars. Added to that is the fact that the number of fintech companies that are dealing with the insurance sector has been quadrupled since 2011.
In the United Kingdom, experts say that even if the insurance industry is not known for its radicalism, there has been a growing pool of insurtech start-ups which are going to help the British market move into the digital age. Paul Heybourne, head of digital innovation at Aviva, reported that venture capital firms seem much more interested for insurtech start-ups and investing in them than for fintech and e-payments in the previous years.
It seems that investors see a good opportunity to make money from the growth of insurtech business. It is also clear that it won’t be long until the moment that we will be able to negotiate and arrange all our insurance contracts through our smartphones, tablet or laptop.