3rd April 2017
A snapshot of what’s hot in the world of InsurTech
Except for a tiny minority of Luddite voices with sentiments to the contrary, more or less everyone has seen technology enhance their lives in one way or another, from household chores and booking travel tickets made easier to entertainment brought closer and admittedly blander things like banking made more engaging. If The Fast Show’s Paul Whitehouse was still on the air, we know what he’d call technology – brilliant.
‘InsurTech’ is the umbrella name given to innovative technology applied to the insurance industry, as insurers strive to continuously improve their services and the ways in which they relate to their customers in an increasingly connected and digital environment. Just like in other sectors, a whole ecosystem has sprung up around InsurTech, from venture capitalists and incubators to multinationals and disruptors.
It can be refreshing and motivational to look outside one’s own industry, so we thought we’d take a snapshot look at the most exciting current developments in the fast-evolving world of InsurTech, or InsTech as it’s less commonly known.
Our Carrot Insurance brand for young and newly-qualified drivers has and continues to demonstrate how driving more safely and efficiently can reduce annual premiums and very similar principles are now being applied to the home insurance market through InsurTech, aided by the Internet of Things (IoT).
Take Cocoon, for example1, which is a single AI-based device that monitors a person’s home more cleverly than conventional intruder systems, learning a family’s movements and habits along with the typical sounds heard on a routine basis, even as far as the cat clattering in and out through its flap, the mail’s daily delivery, and weekly bin collections. Reducing false alarms as a result, and capable of flagging up potential disturbances at their very onset, Cocoon’s users can enjoy discounted premiums depending on which insurer they’re with.
Connected household data centres will soon be analysing all manner of big data including the preventative detection of pipes that are likely to burst2, automatically turning a property’s water supply off and hence reducing the insurance risk from flood damage.
Insurance as a Service (IaaS) is also cooking up innovations, such as Digital Risks3, a specialist insurer for tech firms, providing PAYG cover that can be flexibly adjusted each month to reflect a business’ growth, from initially covering just the founder’s laptop and phone to eventually covering data breaches, employer’s liability insurance and buildings cover as the policyholder’s firm grows.
Wearables have been becoming increasingly popular for a while and health insurance companies have identified the benefits of their customers adopting health monitoring and activity tracking devices like the Fitbit, Jawbone, Microsoft Band and Samsung Gear. In broad terms, more active and generally healthier customers either enjoy reduced health insurance premiums or other health-related incentives and rewards.
Concerns4 are mooted from time to time, an example being the report ‘Health Wearable Devices in the Big Data Era: Ensuring Privacy, Security, and Consumer Protection’ from the American University and Center for Digital Democracy in Washington5, but wearables seem set to remain a focus for the InsurTech sector. In October 2016, a study6 by PMI Health Group found that 26% of London employees are provided with employer-funded wearables, the idea being that HR departments can use the data to help improve staff’s wellbeing and reduce absenteeism.
Meanwhile, in December 2016 as part of its ‘shared value insurance model’, Vitality added the Apple Watch to its Active Rewards programme, incentivising policyholders to benefit from discounted prices by achieving 160 or more points per month by exercising sufficiently enough. Although the mutual advantages of such mechanisms are clear, voices such as Jim Killock7 from the Open Rights Group are looking forward to May 2018 when new, more customer-focussed European data protection8 regulations will come into force.
From the days of the humble telephone and even snail mail before that, to today’s state-of-the-art call centres and online help channels, customer service is also continually evolving thanks to technology, and Microsoft’s CEO Satya Nadella recently highlighted the insurance industry’s embracing of chat bots when speaking at the FinTech Ideas Festival9 in San Francisco in January.
Chat bots are AI-powered computer programs that mimic human conversation and act as online customer service representatives, aiming to be able to interact not just as intelligently as virtual assistants like Cortana, Siri and Alexa, but as capably as real people.
Chat bot adoption is happening worldwide, with Rachel Chitra and Ranjani Ayyari explaining in The Times’ India edition10 that chat bots acquire more knowledge and become more natural as they ‘talk’ to human beings, which has helped numerous credit and insurance websites to reach thousands more customers and enjoy increased conversion rates. PolicyBazaar’s call centre efficiency has, for example, improved by 50% because chatbots act as filters helping distinguish between casual browsers and serious prospects.
Joe Hukum, a technologist working in the insurance sector, explains: “Costs and viability do not allow human agents to upscale. With the advent of technology, internet and intuitiveness of chat, chatbots are able to do a lot of the same thing without any human involvement.”
Judging by the results, chat bots are making positive inroads, with Hukum adding: “Chat is so friendly a medium that this has also led to as much as a 350% increase in lead capturing and a 35% increase in conversions.” One of the chat bot insurance stars in the UK has got to be Spixii, its founders describing themselves as a “band of geeks” from data science and actuarial backgrounds, the company helped considerably by London’s Startupbootcamp InsurTech incubator.
Finally, back in the automotive sector, on which Trak Global’s activities are largely focussed, one of the hottest InsurTech innovations has to be Cuvva11, an app-based platform through which people can obtain car insurance on an hourly basis, covering situations like borrowing a mate’s car for the afternoon. As well as making it a doddle to get a quote by entering the car’s registration number and rough value along with a photo of the vehicle, Cuvva even integrates with Facebook to let people see which of their friends have signed up to avail their cars for such short-term use. The system is linked to the DVLA’s MyLicence scheme and also queries data from the Claims and Underwriting Exchange, allowing it to give a thumbs-up to cover more quickly than legacy systems.
Just like its banking and finance sibling, FinTech, the world of InsurTech is moving forward at a brisk rate, bringing with it many advantages for both insurers and customers, so stay tuned for our next periodic snapshot look at the sector in the near future.
2, 3 http://www.growthbusiness.co.uk/sound-based-ai-future-smart-home-security-2548854/
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