Insurtech has been groundbreaking for the insurance industry, bringing revolutionary innovation to improve traditional processes, furthering efficiencies, and overall boosting industry profitability.
The
peaked in 2018, though has generally remained above 10 billion U.S. dollars in subsequent years. The insurance industry has always been very traditional, so these new developments have the potential to dramatically change the industry – but also come with several concerns. While some consumers are willing to
in exchange for better rates, the share of consumers comfortable with this and opinions towards the collection of personal data varies. For instance, roughly one-third of
What is insurtech?
The insurtech market has developed a wide range of industry improvements through innovation. One such type of innovation is the use of robotic process automation (RPA). This has in more recent times developed further through machine learning (ML) and
the impact of artificial intelligence (AI) on the insurance industry. Improving the performance of internal tasks at traditional insurance companies, such as sales and claims processing (along with back-office administrative tasks). Doing so reduces overheads such as labor and real estate costs, facilitating cheaper prices for consumers. Some new insurance companies have pushed this concept to its limit, only allowing online interactions with customers. One such disruptive insurance provider in the United States and Europe is Lemonade, who exclusively use chatbots to handle customer service and claims. This business model has proved successful so far, with
Lemonade’s revenue growing strongly from 2017 to 2023. A similar development has been seen in the Chinese insurance market, with online insurer
ZhongAn's revenue also seeing strong growth.
Can insurance be completely automated?
Many believe insurtech is set to revolutionize the insurance industry even further, while some roles require human intervention, technology can be utilized to improve efficiency. Many
insurance firms have preliminary concentrated automation efforts on underwriting. Leading firms such as Lemonade for example digitally collect more than 1,500 data points per customer. Data is then analyzed using algorithms to improve the speed and accuracy of this process. While human interaction is still required to monitor the outcome the use of technology greatly aids in reducing company risk. A large share of
small insurance firms have made underwriting the cornerstone of automation efforts.
Large insurance companies have also placed an emphasis on this department with over half of firms surveyed having noted underwriting as their most automated department. As technology continues to evolve and progress insurtech will secure technological progression for the insurance industry worldwide. Ensuring increased efficiency, reduced risks, and further workforce optimization.
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