Deon Pieterse, Ellipsys Technologies (Pty) Ltd
WHAT IS INSURTECH?
Insurtech refers to the use of technology innovations to disrupt or transform the insurance market, especially, but not limited to, how clients interact with their insurers or brokers.
OLD GUARD VS AVANT-GARDE
Insurtech is allowing traditional insurers to innovate and operate more efficiently and effectively with customers in a disintermediated way through chatbots and Artificial Intelligence (AI). Insurtech is also introducing new players to the market either as brokers, underwritten by traditional insurers, or as direct insurers, by enabling nontraditional policy sales and claims intimation via smartphone apps.
ARE THE BENEFITS BEING REALISED? REDUCING COST
Automation and analytics allow insurers to reduce cost and streamline operations, but this may be difficult with traditional operations and legacy systems. An ecosystem approach allows insurers to replace parts of their systems to realise immediate benefits without a total system replacement. With more players in the Insurtech space this is becoming more of a reality and with increasing competition actually becoming a necessity.
Insurtech enables insurers to establish a more datacentric, customer-focused business model. Analysing more data allows a better understanding of customers
to be able to offer more flexible and suitable insurance products. Customers are getting used to a digitised world and starting to expect everything around them to keep up. “The [insurance] customer has evolved, and much of that has been born through how they’re engaging with their other service providers outside of the insurance sector,” said Jeffery Williams, senior analyst at Forrester, a global market research company.
Insurtech not only allows insurers to reduce the cost of insurance (such as allowing a customer to reduce the time on cover) but also allows them to reduce their own
risk by using technologies such as advanced telematics in vehicles and cell phones to monitor items such as driver behaviour. This is achieved by using data to identify, analyse and monitor risk exposure.
Insurers can explore new markets at a lower cost than ever by teaming up with Insurtech companies. Ecosystems offering insurance Application Programming
Interfaces (APIs) are proving themselves and insurers are increasingly willing to fund or support new ventures. This is opening new opportunities in markets such as new younger drivers or uninsured drivers.
By teaming up with an Insurtech partner or even multiple partners, insurers can get the benefits sooner than trying to reinvent the wheel for themselves. Technology is always changing, and the rate of change is accelerating more than ever. Adopting an ecosystem approach to systems allows flexibility to system renewal instead of an all or nothing approach as well as enabling ease of integration with Insurtech partners via APIs.
Customers are expecting their insurers to keep up with technology and to interact with them in ways that they prefer. Technology provides the enabler for insurers to
get creative, all they need is some initiative and the right technology partners.