Insurtech is the term used to describe technological innovations that are rapidly changing the insurance industry. A combination of the words “insurance” and “technology,” insurtech is a fast-growing sector poised to alter the way even legacy insurance companies do business.
Insurtech can also refer to technology-first companies in the insurance sector. A subset of financial technology companies (fintechs), insurtech startups are similarly changing how people buy insurance and work with their providers through use of technology.
Simply put, insurtech is designed to make insurance more efficient.
Insurtech uses innovations in data technology, artificial intelligence (AI), the internet of things (IoT) and other emerging fields to help insurers better understand their customers and the risks they face.
By offering super-customized insurance policies based on specific customer needs and observed behavior, insurtech allows insurance companies to price their products better and deliver faster results.
Additionally, insurance technology offers customers more insight and control over their policies. Many companies (NEXT, for example) give their policyholders 24/7 access to manage their coverage, add additional insured, or change plans when it’s most convenient for them.
Traditional insurance was (and sometimes still is) a slow and labor-intensive undertaking. Insurtech innovation helps by streamlining or automating many processes, which speeds up everything from underwriting to purchasing policies to filing and claim payouts. This helps save money for insurers and customers alike.
Of the many innovations insurtech has introduced, the three that have changed how insurers do business the most are data technology, AI and IoT.
Insurers have always used past experiences to analyze risk and price their policies. This process is known as underwriting, and it’s the backbone of insurance.
The insurance specialists who do this are called underwriters. They can spend years studying various industries and learning just how risky different businesses are to insure.
Data technology speeds the process by gathering data automatically and can analyze large quantities of data quickly. Data tools can efficiently give insurers the accurate information they need by analyzing real-time data while simultaneously accessing historical information.
An underwriter doesn’t need to be human. More often these days, underwriting is done by computer. Using data technology, AI can quickly assess whether a potential client is a good fit for an insurer.
And that’s just one example of insurance AI in action. Today, AI helps insurers cater to their customer’s preferences, from designing better insurance products to simplifying customer experiences such as filing claims or knowing claim status.
For instance, some insurance websites now use chat boxes. Most of these chat boxes aren’t run by people but by chatbots designed to help customers without using expensive human resources.
AI can even handle claims management. Traditionally, an employee at the insurance company (a claims adjuster) had to manually investigate the claim before deciding on compensation. Now, AI can help process claims by evaluating damage via high-quality photos, make recommendations based on claim details, automate information-gathering processes and even detect fraud.
The internet of things refers to the interaction of physical objects and computer software. If you own a fitness tracker (aka a wearable device) or use a voice-assistant speaker to turn on your lights, you’re already using IoT devices.
In the insurance sector, car insurance has embraced IoT. Many auto insurance companies ask customers to either install a device on their car (vehicle telematics) or download an app that tracks their driving.
By seeing exactly how their clients are behaving on the road, insurers can gauge each individual’s risk as a driver and price their plans accordingly.
These three new technologies have transformed the insurance business because they work together to do things that were impossible just a few years ago.
With IoT, insurers can learn from their clients by gathering real-time customer data and details to understand their needs and provide better services. Data technology aggregates and organizes this mountain of data and then aligns it with relevant historical data. AI can use all this information to help insurers create customer-specific policies, speed up claims processing and use automation to streamline tedious processes.
For instance, say an electrical fire causes damage to the stockroom in your retail store. Previously, you would have to call your insurance agent to file a claim, mail photos or wait for someone to assess the damage.
However, if you’re a NEXT customer, you can save time by taking photos with your smartphone’s camera, upload it to your account via our mobile app, and file a claim fast. You’d also get updates on the status from our claims advocates throughout the process.
By utilizing insurtech, insurers can new products, customize plans like never before, offer better user experiences and provide competitive pricing compared to other legacy insurance companies.
Thanks to insurtech, NEXT has tailored insurance coverage for over 1,300 small business professions. We’re reinventing business insurance with a tech-first approach.
You can get affordable coverage because you only pay for what your business needs. Start a quote, customize your options and access your certificate of insurance online immediately after payment — in about 10 minutes.
Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.