What is InsurTech & Why It’s Shaking Up the Insurance Industry

Traditional insurance is boring. But then again, ‘fun’ has never been a prerequisite for insurance coverage. 

So, the more appropriate statement would be this: Traditional insurance is outdated.

Nowadays, the product offering, additional benefits, and responsive customer service matter just as much as the policy’s price.

With modern consumers seeking insurance with smarter risk and pricing assessments, personalised experiences and efficient solutions, traditional manual systems, slow processes, and long sales calls are quickly losing relevance in today’s digital age. 

This gap in the insurance market allows InsurTech companies like Pineapple to thrive. InsurTech, which describes the use of technology in insurance transactions and processes, is now an industry sector in itself!

TL;DR – Our version of “I’m not reading all that, *SparkNotes pls.”

• Insurtech is the blend of “insurance” and “technology,” driving a fundamental shift in how insurance is delivered and experienced.
• It leverages advanced tech like AI, Machine Learning, Telematics, and Big Data to create smarter, faster, and more personalised insurance solutions.
• Insurance customers can enjoy faster quotes and claims, fairer premiums, greater convenience via apps, and highly customised cover.
• While concerns about data privacy and potential bias exist, reputable Insurtechs like Pineapple are regulated and prioritise security.
• Insurtech isn’t just the future; it’s the present of insurance, transforming the industry in South Africa by making cover more accessible, transparent, and user-friendly.

Ready to Experience the Insurtech Revolution? Get Your Instant Pineapple Quote!

‍

‍

What is InsurTech? Not Just a Buzzword, A Revolution

InsurTech (Insurance + Technology) uses technology in insurance processes and transactions. It’s a structural shift in how insurance is delivered. 

InsurTech’s application of tech in insurance has disrupted the insurance industry’s retail and commercial processes.

As the CEO of an insurtech company, Pineapple’s Marnus van Heerden said, “[Pineapple] was founded at a time when sort of the latest wave of technology was available. It’s driving a lot of efficiency within the organisation because we’ve got this ability to plug and play the latest technology that comes along.” 

Radical changes in product development and modelling, administration practices, and distribution have improved and transformed underwriting, claims processing and policy pricing.

Marnus continued, “All systems are modular and can communicate with other systems, plus are API driven, which means that whenever we want to implement something new, we can do it at a fraction of the time of our competitors in the market.”

Improved product offerings, faster underwriting turnaround times, and streamlined operations mean greater efficiency and savings potential.

In essence, InsurTechs prioritise the customer’s needs over business profits. 

The Tech Behind InsurTech

Harnessing technology like artificial intelligence (AI), machine learning, telematics, and data analysis allows InsurTech companies to create insurance products with intelligent underwriting. 

This tech integration gives customers greater agency over their insurance policies.

They can get quotes, manage their policies, update personal details, or submit a claim anywhere at any time. With a simple click of a button, customers can also facilitate the ability to stop and start their insurance plan based on when they need it and when they don’t.

Artificial Intelligence in InsurTech

When people think of AI, they think of ChatGPT or generating images so realistic, you’d have a hard time believing they’re not. But AI looks slightly different in the insurance space.

Artificial intelligence automates tasks typically done by humans, making insurance processes quicker. This includes understanding complex insurance jargon (complicated insurance language), using historical data to make informed decisions, and solving problems. 

Incorporating AI in insurance products means:

• Efficiency and cost-saving
• Enhanced fraud detection
• Faster client support services
• Personalised interactions

Machine Learning in InsurTech

Machine Learning (ML) is a core part of AI that allows computer systems to “learn” from historical data without explicitly being programmed for every unique scenario. ML algorithms find patterns in vast datasets instead of following fixed rules and use these to make predictions, assess risk or make decisions.

Incorporating ML in insurance products means:

• Accurate risk assessment
• Predictive capabilities
• Optimised, fairer and more accurate pricing
• Personalised product offering
• Improved services

Telematics in InsurTech

Telematics is the use of a device, typically a device installed in your car or a smartphone app, to collect and transmit data about your driving habits. This data normally includes your mileage, speed and acceleration, braking habits, and even your driving time.

Incorporating telematics in insurance products means:

• Usage-based insurance
• Safer driving which leads to reduced premiums and claims 
• Enhanced fraud detection
• Stolen vehicle recovery (SVR)
• Rewards and incentives for safe driving

Data Analysis in InsurTech

Data analysis is the foundational process of cleaning, inspecting, transforming and modelling large datasets within InsurTech. The main goal is to uncover useful information and support intelligent decision-making.

Incorporating data analysis in insurance products means:

• Optimised processes
• Product innovation
• Accurate risk management
• Enhanced customer service 
• Increased efficiency  

With InsurTech gaining greater momentum, this reflects a gradual industry-wide shift from a product-centric to a customer-centric model.

How Insurtech is Changing the Game for Customers

Traditional Insurance versus InsurTech: A ‘Before & After’ Look

South Africa has seen an increased adoption of digital technology, with an estimated 74.7% of the population having internet access (as of January 2024). 

This wider use of technology cuts out ‘the middle man’ in insurance, allowing the market to develop and price products at a level more closely aligned with customers’ demands.

Something Marnus agrees with, stating, “the introduction of InsureTech into the market has definitely been a net win for everyone.”

He went on to explain that a lot of traditional insurers are trying to catch up when it comes to their technological capabilities, stating: “If we (as insurance providers) all up the level of quality, trust and service, then the industry will grow.”

InsurTechs are creating a more direct relationship between insurance providers and their customers. Clients now have greater access to and control over their policies.

This gives customers more control over the insurance products they purchase and on what terms, without human intervention (call centre agents), using their mobile phone and internet connection.

Tired of Traditional Insurance? Get Your Personalised Insurtech Quote Now!

‍

‍

Common Concerns About InsurTech

Like with all new inventions, insurtech companies have raised concerns about biased pricing practices, data privacy, resistance to digital transformation and job displacement. 

The aim of using vast amounts of data and advanced algorithms is to offer fairer premiums, but the outcome might lead to the sophisticated tech making biased conclusions. 

For example, certain areas might be linked to higher risk based on crime stats. This would lead to customers in those areas being charged more for insurance premiums, despite having a favourable individual risk profile.

And while technology has significantly advanced, it’s still improving. Mistakes such as hallucinating data that is not there or making incorrect assumptions about a request are possible. 

Therefore, there is a need to have employees check the results that AI produces, which addresses the other issue associated with AI, the skills gap. Having the right people who are able to make sense of the data in order to make smart data-driven decisions is very necessary to an insurtech company’s success.

InsurTech companies require digital skills, and the insurance industry may not have the right internal resources to fully utilise the tech. 

But this is a relatively easy problem to solve: companies can overcome this hurdle by investing in their workforce with advanced training. 

This training will transform occupational roles, and shifting jobs within and between sectors will accelerate. The expectation is that, in future years, automation will create more jobs than it destroys.

Entry-level digital skills needed are:

• Computer literacy  
• Data entry  
• Social media  
• Web-based communications and research  
• Word processing  
• Email and chat  
• Secure information processing 

Advanced digital skills needed are:  

• Programming, web, and app development  
• Digital business analysis  
• Digital marketing and content creation  
• Digital design and data visualisation  
• Digital product management  
• Data science  
• User experience design

The next priority is protecting sensitive information and client data. Robust security measures are key to the survival of insurtech companies—failing to implement these could result in data breaches, a loss of trust, and legal issues. 

What’s the Future of Insurance with Insurtech?

The rise of insurtech providers in South Africa is expected to grow due to the simplification of the claims process, improved communication with the client, and the capability to implement automation. 

Continued insurtech innovation can potentially change how the insurance industry works. 

Marnus explained, “It’s scary how many of South Africa’s vehicles are still uninsured, but, I think it’s a massive opportunity. It will be good for the insurance industry, of course, but it will also be great for wealth creation in our country.”

Plus, changing the relationship between customers and insurance providers can make insurance products more closely aligned with individual preferences and priced more appropriately according to risk.

The growth is expected to come from pensions and life insurance, the fastest-growing products in Africa. Motor insurance is a close competitor and is the most significant contributor to non-life insurance.

Discover the Future of Insurance. Explore Pineapple’s Cutting-Edge Tech!

How to Get Started with an Insurtech Provider

Frequently Asked Questions: InsurTech Edition

1. What is insurtech?
InsurTech refers to the fusion of “insurance” and “technology”. It refers to companies like Pineapple that use innovative tech solutions like AI (artificial intelligence), ML (machine learning), and data analysis to optimise, automate and simplify their processes and services. 

2. How does insurtech differ from traditional insurance?

InsurTech differs from traditional insurance in procedures, such as access, pricing, buying journey, communication and claims. Traditional insurance often relies on legacy systems, broad risk categories, and manual processes. InsurTech companies, like Pineapple, promise efficiency, affordability and personalisation. Using digital platforms and mobile apps, insurtechs offer faster service, simplified user experience and flexible products like usage-based policies.

3. Is insurtech safe?

InsurTech companies are generally safe. They are regulated by the same financial authorities as traditional insurance providers, namely the Financial Sector Conduct Authority (FSCA).  InsurTech companies also invest heavily in advanced data security measures to protect sensitive client information. Use online reviews from platforms like Hellopeter and search engines (Google, Bing, etc.) to confirm a company’s legitimacy.

4. What technology does insurtech use?

It takes a few key technologies to make insurtechs successful, namely:

• Artificial Intelligence (AI) for automation and intelligent decision-making.
• Machine Learning (ML) for accurate risk assessment and personalised pricing.
• Telematics (devices or apps) to gather real-time data on driving behaviour.
• Big Data Analytics to process vast amounts of information for insights.
• Cloud Computing for scalable and efficient operations.
• Some also explore Blockchain for enhanced transparency and security in specific processes.
  
  

5. Will I save money with insurtech?

InsurTech companies, like Pineapple, promise reduced insurance premium costs by leveraging advanced data, streamlined operations and efficient digital processes. These tech-driven solutions allow insurtechs to offer individualised policies and competitively priced premiums based on your unique risk profile. 

6. Is Pineapple an insurtech company?

Pineapple is a South African insurtech company and authorised FSP (financial services provider). The company was founded in 2017 by cofounders Marnus van Heerden, Ndabenhle Junior Ngulube, Matthew Elan Smith and Sizwe Ndlovu. Using cutting-edge technology, Pineapple offers transparent, affordable and accessible insurance directly through our mobile app. Our products include car insurance (starting from R531 p/m*), per-item cover (starting from R85 p/m*) and home contents insurance (starting from R77 p/m*). Prices are risk profile dependent. 

Conclusion – Why Insurtech Isn’t the Future. It’s the Now.

The saying goes, “Those who fail to plan, plan to fail,” and the same can be said about insurance. The arrival of insurtech is imminent. You don’t want to be late to the revolution simply because it’s in the future—it’s not. 

The future is now.

The world is evolving, and so is the insurance industry; it’s becoming more intuitive, efficient, and tailored to your needs.

Personalised premiums driven by real data and lightning-fast claim processing allow insurance to work in your favour. InsurTech companies are leveraging technology to empower you, offering speed, fairness, and transparency that traditional insurance providers don’t typically provide. 

Insurtech companies like Pineapple are leading the charge, bringing disruptive solutions and transforming complicated and lengthy paperwork into simplified app-based innovations.

Pineapple uses technology to put the power back in your band:

• Personalised premiums based on your unique profile.
• Quick quotes and cover—90 seconds for a quote and under 5 minutes to start your cover.
• Lightning-fast claims submission and processing.
• Accessible quotes based on your preference (online via our website, app, or phone).
• No paperwork or complicated jargon.

Are you curious how switching to an insurtech like Pineapple can improve your relationship with your insurance policy? 

Get an obligation-free quote to explore the benefits firsthand. 

Please note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.