Insurtech – Risky or Innovative?
The modern innovation that is scaring some and intriguing others-
Insurtech – The use of technology in the insurance industry to find better prices and more efficient ways to file policies. Some even have user-friendly apps for policy users to view their accounts.
- Incumbents- The traditional, big insurers that have been around for a while. Incumbents generally play by the rules and avoid working with any start-ups or taking any risks.
- Startups- Innovative startups aim to capitalize on developing a new product or service, most are not sustainable. Insurance startups try to create products or services that make the insurance process more efficient and find better savings.
- Re-insurers- Essentially the insurance for insurers. Takes a portion of the premium in exchange for taking on part of their risk portfolio. Typically invests heavily in upcoming insurtech.
- Tech Companies- Companies like Google, Facebook and other tech moguls enable the market to continue moving forward in technology innovations.
- Disruptors- Companies like Amazon are disrupting retail, Netflix is disrupting entertainment, and Airbnb is disrupting hospitality. Insurance start-ups that are using insurtech and other innovative ideas could be considering disruptors of the industry.
Pros- Tackling the data and analysis issues that brokers face every day by grouping together policies in the more cost-effective way. Tech that attempts to lower prices for policy owners and make the process more efficient. Insurtech startups are also more apt to take risks in the industry and go after potential game-changing models and apps. The market for insurtech is expected to grow 41% annually between 2019 and 2023.
Cons- Insurance is very regulated with many legal hoops to jump through. Insurtech along with other tech advances in insurance can seem unstable and risky to big insurance incumbents who tend to avoid change. Being cautious in this industry is one of the reasons big brokers have remained successful, but insurance is always changing, and younger generations want more tech-friendly solutions.
Sources: https://www.investopedia.com/terms/i/insurtech.asp
https://www.investopedia.com/insights/disrupt-insurance-industry/