Expertise in IoT, robotics, artificial intelligence and advanced analytics will be the defining feature of the most successful insurance companies of the future – and that looks set to drive established players into partnership with young insurtech start-ups, according to a new study from professional services company Aon.
The report, Global insurance market opportunities: Reimagining risk management, argues that insurtech start-ups are more likely to be helpful than disruptive when it comes carrying the market forwards. Over half of these companies, it points out, develop technologies that are designed to be sold to insurance providers as their target customers, rather provide competing services.
“The insurance industry has been relatively slow to embrace digital technology compared with other industries. That reticence has opened up a window of opportunity for entrepreneurs to deploy digital technology to improve the customer experience through a host of start-up companies,” say the report’s authors.
“This has allowed the start-ups to not only provide more effective solutions, but also to continuously improve them through the collection and analysis of data.”
Read more: Survey: Life insurance firms face hurdles in digital transformation race
Focus on IoT
Looking at IoT in particular, the report focuses on connected cars and smart devices as a new source of information that could “change the basis for underwriting and pricing of risk, as well as provide continuous monitoring that enables customers to mitigate exposure to losses before they happen.
The report’s authors provide three examples of devices they believe reflect this trend. They are:
- Zubie: A connected auto hardware device and free app that provides real-time location data, trip histories, maintenance alerts, engine diagnostics and driving insights.
- HumanAPI: A healthcare IoT platform that aggregates, normalizes and stores data from multiple sensors in consumer wearables, medical devices and mobile health apps, along with medical records, lab test results and prescriptions.
- Neos: A home insurance start-up that uses connected devices to monitor the home for break-ins, fires and leaks and that has the support of numerous insurers, including Hiscox, Aviva and Munich Re.
Read more: Intellect SEEC: Transforming the underwriting role for the IoT age
“Gnashing of teeth”
It’s time established insurance companies took this tech stuff seriously. They should look at novel business models and emerging technologies as ‘opportunity generators’ that can open the door to new risk markets, say the report’s authors.
“With all the gnashing of teeth about how insurtech is going to hurt the industry, one would think some outside force was imposing its will on us – some Wall Street bankers or faceless global power brokers at work. Instead, it turns out that we are fueling the fire ourselves. We are enabling the disruption,” they conclude.
Next week will see our Internet of Insurance event open in Austin, Texas, on 26 & 27 September. Attendees with gather to discuss how they are navigating the digital disruption of traditional insurance business models.