Insurtech is a term used to describe technology innovations that discover efficiencies and cost savings within the existing insurance industry model.
Insurtech combines the words ‘technology’ and' insurance’ - inspired by the well-known term fintech.
In 2021, the global insurtech market was valued at $8.8 billion. With a CAGR of 39.1%, it’s expected to reach $166.4 billion by 2030.
This is clearly an industry that’s thriving at the moment, meaning we can expect to see some major innovations over the coming year.
So, with that in mind, we’re going to take a look at the top insurtech innovations solutions that are revolutionizing the industry in 2023.
A deeper look at insurtech
Before we take a look at some of the top insurtech innovations this year, let’s explore the concept in further detail.
Insuretech is premised on the belief that the insurance market is ripe for disruption and innovation. It’s exploring avenues that big insurance businesses have less incentive to exploit, for example:
- Utilizing new data streams from Internet-enabled devices to price premiums dynamically based on consumer behavior
- Offering ultra-customized policies
With conventional insurance, some individuals pay more than they should be based on the basic data utilized when grouping people.
This data and analysis issue is one of the things insuretech looks to tackle head on. Insurance businesses can build more finely delineated groups, which enables them to price in a competitive manner.
They achieve this by utilizing inputs from all manners of devices, from the activity trackers we wear on our wrists to geolocation tracking of vehicles.
Not only can insurtech startups provide improved pricing models but they’re testing the waters with a wide range of possible game-changers. This includes:
- Adopting peer-to-peer models that incentivize positive choices through group rebates
- Generating on-demand insurance for micro-events, such as borrowing a loved one’s vehicle
- The use of apps for pulling disparate policies into one platform for monitoring and management
- Adopting peer-to-peer models to generate customized group coverage
The benefits of insurtech
Insuretech plays a vital role in changing how we apply and pay for insurance coverage. Some of the possible advantages include:
- Less fraud - By capitalizing on trend analysis, analytics, data leverage, and machine learning, insuretech businesses may be able to spot data inconsistencies to detect fraudulent activities. Furthermore, big data could find possible loopholes that insurers can close to prevent exploitation.
- Lower operating expenses - Insuretech businesses are able to operate remotely, meaning less overheads.
- Better flexibility - Contemporary insuretech businesses are more likely to have transferrable, short-term, customized, or flexible plans. You’re more likely to receive specific coverage for certain needs over the required timeframe.
- Emphasis on individuality - Because of the innovative nature of gathering data and processing information, a lot of new technology is now available so you can better understand the needs of individual customers. This helps with pricing, as well as delivering consistent and reliable coverage based on historical data.
- Efficiency - Policyholders and policy seekers can explore and research options online. You don’t have to wait hours to speak to a business rep.
- Better customer experience - By making the most of technology, consumers are more engaged when choosing coverage. They receive a personalized experience.
Top insurtech innovations solutions revolutionizing the industry in 2023
Now that you’ve got a better understanding of insurtech and the benefits associated with it, we’re going to explore some of the main innovations solutions driving the sector forward in 2023:
Technology to facilitate hyper-specific insurance policies, such as hot shot truck insurance
As mentioned earlier, one of the main benefits associated with insuretech is the ability to provide insurance based on the customer’s exact needs. This means that consumers aren’t paying for things they don’t need.
We’ll see a whole host of new insurance policies enter the market this year, as insurtech firms are able to cater to much more specific requirements.
A good example of this is Coverwallet’s insurance for hot shot trucks. In the past, you may have only been able to acquire a general insurance policy for commercial trucks. However, a hotshot truck refers to trucks that are utilized for expedited cargo transport, or in other terms, trucks that deliver products in a very short timeframe.
We’ll also see a lot of short-term one-off policies enter the market too. For example, insurance plans that are designed to provide auto coverage for a friend who wants to borrow your car for a few hours. These plans will be easy to access online, ensuring they’re convenient and can be depended on for last minute emergencies.
Insurance fraud detection software
Did you know that insurance fraud costs the United States $308.6 billion per annum?
Earlier, we mentioned that insuretech can be used to reduce the risk of scams and fraud, and this is something we’re already starting to see with the new insurance fraud detection solutions entering the market.
Mobile and cloud technologies can support insurance agents by providing real-time data to deal with the following:
- Internal employee scams
- Insurant data inconsistency
- Mutually exclusive diagnoses
- Fake dependent family members
- Fake diagnoses
- Inflated claims
- Duplicate claims
For instance, let’s say a client tries to claim for the same injury twice or tries to recover the same property that was damaged in a fire by using counterfeit documents with a new date.
The system will compare claim data within their database to find the fraud. This will help to lower expenses by removing the influence of an interested party, delivering higher accuracy, and boosting operational speed.
Insurance APIs aren’t new. Back in 2017, AXA Insurance launched its own API, helping the business to use the Insurance-as-a-Service approach to become a pioneer in the Asia region.
Throughout 2023, we’ll see more insurance companies branch into this space. After all, old-fashioned, over-regulated business models are slowing down innovation in the insurance sector.
Using an API, which is an Application Programming Interface, addresses the lack of flexibility a lot of insurers have, as you can then share services and data with third parties.
This means insurance companies have the chance to try disruptive business models, boost sales, generate new digital products, and offer a better customer experience.
For example, an insurance firm that has its own API can enter the online travel insurance sector and increase sales by partnering with online travel agencies, such as hotels.com or booking.com, and cross-selling services directly to travelers from the partner website.
Furthermore, third-party APIs can also be used for the purpose of checking consumer data to prevent fraud and abuse.
Blockchain in the insurance market will disrupt reinsurance operations
Last but not least, we cannot talk about technological innovations without discussing the blockchain and how it’s impacting the insurance sector.
According to PWC, the implementation of blockchain can save reinsurers around the world between $5 and $10 billion.
The nature of reinsurance is close to chain structure. So, it probably is no surprise that it’s viewed as the second biggest distributed ledger use case in fintech, only coming second to payments.
The major advantages for stakeholders include the minimization of reputational risks, the elimination of errors, and the reduction of both verification and validation time.
By utilizing the blockchain, reinsurers don’t need to interact with the insurer to get data the client provides. For example, you need to verify a number of insured events for one health risk reinsurance contract. If smart contracts connect all parties, the reinsurer will get direct access to the health data of the insurer.
Another idea that we’ll see in force throughout the year is preventing the reinsurer’s loss access. The chief issue here is the loss variability at various stages of the claim handling because of complex documentation processing.
This issue is solved via blockchain, as it records the loss estimates history for every contract. This results in improved difference solving and liability tracking.
Leveraging insuretech to revolutionize the industry
So there you have it: an insight into some of the top insurtech innovations solutions that are revolutionizing the industry in 2023.
From fraud technology to blockchain, there are many different innovations that are set to take the insurance sector by storm.
We hope that this has given you a better understanding of what to expect over the coming months and the different types of technologies that can be used in insurance to drive cost savings and efficiencies.
Kerry Leigh Harrison has over 11+ years of experience as a content writer. She graduated from university with a First Class Hons Degree in Multimedia Journalism. In her spare time, she enjoys attending sports and music events.