The rapid growth of Insurtech startups in the insurance industry is of great help. Insurtech that stands for “Insurance Technology” is a vast arena that is constantly changing with the change of technologies available in the insurance industry. Any technology that an insurance company uses to develop their insurance facility can be termed Insurtech.
Let us find out how this concept of Insurtech is leveraging big money for start-ups.
What is Insurtech?
Insurtech can be termed as the advent of any new insurance technology by insurers that saves costs and makes the process more efficient. Insurtech is said to be the subdivision of “fintech”- technological advancements in the field of finance. Similar to fintech, Insurtech also deals with various kinds of technology, so it is difficult to choose anyone to discuss its characteristics and applications.
Companies that provide Insurtech are also known as Insurtech. 2010-2019 is considered as the first nine years of Insurtech. An estimated amount of $16.5 billion has entered into the startup companies that are in the periphery of insurtech.
How Does Insurtech Works?
Since the idea of insurtech is not very old in the market, its features and characteristics are constantly changing and evolving. In general, insurtech tries to make the insurance process efficient and improves the backend formalities. Along with that it also cuts the cost of the insurance companies. To channelize this more, smartphone applications and chat boxes are examples of insurtech. Now the insurance companies do not need customer service employees to respond to each customer physically. These technologies do it for them. This has cut short human work also.
Investment and Insurtech Startups
The investment scenario for start-ups in insurtech is off to a grand start in 2021. By the end of the first quarter, the market had seen several players in the startup category announce their capital. Those include Clearcover, Alan, Next Insurance, and The Zebra.
But anyone accustomed to start-ups that provide “insurance-related” products and services knows, this sector is a huge mixed bag that needs to be broken down into small pieces and segregated to know how the companies inside this idea are working.
The Exchange segregates insurtech startups into three major categories:
- Neoinsurance: They are companies like Root, and Metromile that use technology that sell insurance policies in a technologically updated manner. These companies often have a good mobile experience.
- Insurtech Marketplace: As the name suggests, these companies like Zebra and Gabi allow users to understand the insurance options better before buying.
- Insurtech Enablers: The third category includes the companies like AgentSync that help other companies to digitize and modernize their insurance business.
Key Companies and Market Share Insights of Insurtech
The insurtech market is highly broken up in nature. The market can be characterized by a large number of small players and few big players of the market. These market players are looking forward to innovations and offer unique solutions to improve the “insurance value chain”. This in turn attracts funds from big investors worldwide.
Few key companies include:
- Damco groups
- DXC Technology Company
- Insurance technology Service
- Oscar Insurance
- Shift Technology
- Trov, Inc.
- Wipro Limited
- Zhongan insurance
Types of Insurtech
Here is a list of few types of Insurtech, that the insurance companies use:
Artificial Intelligence (AI) refers to software that performs functions associated with humans. Chatbox is an example of AI. It is a special function that enables companies to respond to their users with either voice or text replies instantly.
Machine Learning can be said to be a subdivision of AI. It is learning over time. It uses the support of algorithms to imitate neural networks in the human brain. It allows computers to gather data by withdrawing patterns from raw data.
Internet of Things
With the advent of the Internet, everything has been simplified to a greater extent. It has impacted the insurance world as well.
- Smartphones: Smartphone apps can be formulated for users, businesses, and insurance companies as well. This simplifies the work of the users and the business and becomes more user-friendly.
- Drones: Drones are also used by many insurers to ensure customer safety. This prevents the customers from availing any property that can be unsafe for them.
Insurtech From 2020 To Today
Data from Pitchbook asserts how large the startup industry has expanded. According to the data, $18.3 billion was spent on insurtech startups in the last year over venture capital, M and A activity, and private equity. That was a billion-dollar under its 2019 outcome, but still, after the pandemic situation, the 2020 result was somewhat splendid.
This year is showing more scope of development for the insurtech market, at least for venture capital.
The simplicity brought in by insurtech allows individuals and businesses to avail of insurance benefits quickly and conveniently. This enables time-saving and rescues from the old technologies of insurance. The market for insurtech has taken a bigger leap in 2020 despite the prevailing pandemic and is expected to grow more. Many big companies are adopting this technological advancement with a smile on their face.