Insurtech refers to the use of technology in the insurance industry to improve efficiency and more accurately assess risk. The value of capital being invested in insurance technology companies globally is on the rise. The insurance industry has always been very traditional, so these new developments have the potential to dramatically change the industry. The market for underwriting improvements is set to grow by over 60 percent by 2020.
There is a wide range of innovations being explored in this industry. In 2016, the leading innovations were the use of software as a service/cloud and big data/machine learning. Underwriting automation means that the process of evaluating the risk of insuring a client will be performed by a computer, rather than a person. There is still plenty of room for growth, because very few insurers have mastered how to integrate this innovation into their business models.
The auto insurance industry has already begun integrating technology into its policies, for example with the introduction of usage-based insurance (UBI). In the United States, the most valued UBI feature in 2017 was the automated emergency call. Unsurprisingly, Millennials were shown to be the generation most likely to be willing to share recent driving data in return for personalized insurance quotes in a 2017 survey.
The health insurance industry is another area which has begun to utilize Insurtech. In a 2017 survey, 72 percent of respondents said that they either already shared data with their health insurer or would consider it in exchange for benefits. South African consumers were shown to be the most likely to use a connected device if recommended by their health insurance company in a 2016 survey.
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