What is an Insurtech?

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Insurtech refers to the innovative use of technologies to improve and modernise various aspects of insurance, namely current, and traditional insurance models. Similar to fintech, a portmanteau of the words ‘financial’ and ‘technology’, insurtech is the combination of ‘insurance’ and ‘technology’. 

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The word ‘insurtech’ is also used as a synonym for startups offering new products or delivering traditional coverage faster and more efficiently than traditional insurers.

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Most insurtech companies and startups envision a future where data empowers smarter decisions, technology streamlines processes, and personalised insurance solutions take centre stage.

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Their emergence started around 2010 as an offshoot of a similar endeavour in banking: fintech. Insurtech most consistently refers to the use of apps, wearables, big data, machine learning, and other transformative technologies to improve processes across the insurance value chain.

How is Insurtech Changing the Insurance Game?

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The rise of insurtech startups has led to innovation that’s challenging traditional players to adapt to the imminent wave of change. Insurtech aims to do away with traditionally static factors like age and location when assessing your risk. 

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Instead, telematics and other data collection methods will take their place. Their modernised methods allow insurers to create personalised risk profiles with the goal of lowering premiums for responsible drivers. 

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Here is a small list of how insurtech companies are changing the insurance industry:

• Through data-driven risk assessment.
• By introducing digital transformation.
• Refining underwriting.
• Streamlining claims processing.
• Personalising policies.

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Benefits of Insurtech for Consumers

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There has been an explosion of sensors and connected devices during the 21st century. IoT (Internet of Things) devices, like telematics in vehicles and smartphones, allowing insurers to collect real-time data on driving behaviour. 

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Insurtechs analyse this data to improve premium pricing through an improved understanding of risks. 

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The rise of insurtech offers the following advantages for insurance customers:

• (Potentially) Lower premiums
• Convenience 
• Efficiency
• Transparency and Control

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Overall, an insurtech’s pipeline dream is to foster good driving behaviour and reward it with lower premiums and benefits.

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The digitisation of insurance processes is influenced by insurtech’s need for efficiency.

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Digital transformation through the use of automation tools can reduce manual human intervention. Insurance professionals are then free to focus on complex issues that require personalised client interactions.

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The digitisation of insurance also means customers can access insurance products directly from the comfort of their homes or anywhere in the world. 

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Should you need to speak with someone, intelligent AI and bots are able to assist outside of working hours to facilitate the 24/7 narrative from anywhere, anytime.

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Insurtech companies also aim to refine the underwriting process. 

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Underwriting is when an insurer reviews an individual's profile, assesses their risk profile, and offers them an insurance package that includes coverage. Traditionally, underwriting is a time-consuming and manual process involving a lot of paperwork and manual data entry.

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However, with technologies like machine learning algorithms and artificial intelligence, underwriting can be automated and completed much faster. 

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The same can be said about the claims process.

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Many policyholders are weary of the insurance claims process as, historically, they have a reputation for being slow and bureaucratic. This is because each claim has to be manually reviewed.

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Insurtech companies are changing this narrative by providing a digital solution. This allows policyholders to submit claims online, upload documents and photos via their phones, and track their claims progress in real time.

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And lastly, tech advancements in insurance have allowed the creation of personalised insurance policies. 

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Insurtechs allows insurers to offer customised coverage options uniquely tailored to your specific needs. This coverage empowers insurance consumers to choose a policy best suited to their driving habits and the type of vehicle they drive.

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Overall, by wielding technology, insurtech is making informed decisions around enhancing risk management, and improving overall operational efficiency. 

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Challenges and Considerations with Insurtech

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As technology advances, data analytics' role in the insurance sector is likely to evolve, with increased emphasis on real-time data, artificial intelligence, and machine learning techniques in fraud detection.

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However, a few concerns surrounding insurtech companies have emerged, namely data privacy, competition and a rigid industry. 

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Sharing data, especially through the use of telematics devices, can be a concern for privacy-conscious consumers. Therefore insurtech companies have the task of clearly outlining what data is collected, how it's used, and exhaustive measures taken to protect a client’s privacy.

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Insurtechs also face the challenge of competing against longstanding traditional insurance companies. This is because established insurance companies have significant resources and brand recognition.

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Their reputation means the public can trust that they’re a reputable company, not just a new company that popped up overnight.

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Lastly, insurtechs may be a breath of fresh air in an archaic industry, but they face obstacles due to heavy regulation and public scrutiny. 

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Unlike some industries, where merging speed and satisfaction is encouraged, insurers are legally required to protect customers from privacy breaches and bias.

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Thankfully, due to the vast amounts of sensitive data, cybersecurity measures are increasingly focused on protecting customer information from cyber threats and data breaches.

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The Future of Insurance with Insurtech

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The continued sophistication of technologies like artificial intelligence and big data means we can expect even further advancements in the insurance sector.

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As previously mentioned, the insurtech invasion drives significant changes by improving efficiency, personalising offerings, and enhancing the overall customer experience.

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Automating tasks like policy management and claims processing potentially leads to quicker turnaround times, from getting a quote to receiving a claim payout.

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Insurtech companies also aim to streamline the insurance experience by eliminating unnecessary paperwork, making things more convenient.

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Just picture yourself with the freedom to manage your policy, pay your premiums, and even register claims, all from a user-friendly mobile app!

How to Get Started with Insurtech

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Getting started with insurtech is mostly a simple and hassle-free process, especially when compared to traditional insurers (no shade). 

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Simply start by researching reputable insurtech companies that specialise in the type of insurance coverage you require. 

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For instance, someone looking for insurtech providers offering car insurance should look for providers that leverage data-driven risk assessment. Additionally, find out if they offer personalised coverage options tailored to your driving habits and car type.

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Pineapple is such a company. 

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Founded in 2017, and launching our motor coverage product the following year, we’re a proudly South African insurtech startup with offices in Gauteng. 

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Pineapple uses smartphone camera technology and AI (artificial intelligence) to streamline the insurance experience.

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Click here to experience the insurtech difference by getting a comprehensive car insurance quote in minutes.

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While researching South African insurtech companies, prioritise online reviews, as these can give you an idea of a company’s credentials. Look for companies with strong reputations, established track records, and a focus on customer satisfaction.

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You can use platforms like Hellopeter or Google reviews. The latter is extremely trustful as it requires reviewers to be verified and prohibits multiple reviews per business to a single email address.

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Remember to consider companies endorsed by reputable industry organisations like the FSCA (Financial Services Conduct Authority), the SAIA (South African Insurance Association) or those receiving positive recognition in the Insurtech space.

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Alternatively, you can reach out directly and enquire about specific questions you might have.