While the traditional insurance industry has been reluctant to embrace FinTech, many companies are finally seeing the light, realizing that if they want to see a boost in revenue and customer satisfaction, they need to turn to new technologies.
“Traditional business models are being challenged and not by innovation in insurtech per se, but by technology shifts in other industries,” said Mike Randall, CEO at Ricston.
Randall used the car industry as an example, explaining that if insurance companies had access to data from vehicles, they would be able to “better assess risks and drive premiums to the most relevant demographic,” which will allow insurance companies the chance to offer better rates.
Case in point: U.K. company By Miles is set to launch a connected vehicle policy for owners of Tesla automobiles that will collect real-time mileage information directly from the car’s account and use the distance they have driven to price their insurance each month. The solution, which is available through a partnership with digital insurer La Parisienne Assurances, can help Tesla drivers save significantly on their annual car insurance.
James Blackham, co-founder of By Miles, says the insurance industry needs to “catch up and launch policies as smart as the cars themselves.”
Car insurance providers aren’t the only ones using technology to their (and the customers’) advantage. Many insurance companies are turning to APIs for everything from application integration and insurance as a platform to innovation and client connectivity. Multinational insurance provider Zurich Insurance, for example, has created APIs for their partners and customers to integrate risk management systems, as well as share data and information.
In addition, Social Finance (SoFi) offers life insurance via a partnership with startup Ladder, with an API integration delivering an instant quote to its customers. Allianz Global Corporate & Specialty (AGCS) has also built a system to successfully complete an entire transaction — from quote through issuance, and payment — on a blockchain using a banking API.
And artificial intelligence (AI) and machine learning (ML) are gaining popularity in the industry, with a recent study showing that 87 percent of insurers are looking to invest more than $5 million in AI before 2020, and more than half are considering using the technology to innovate their processes