In the same way an article precedes a noun, insurance precedes a possession. And when one’s most prized possession is family, we put a number on health with life insurance. Here, we discuss the trends expected to impact the industry in 2024 and detail what the future might hold for insurtech. As technology radically alters every sphere of our life, why should insurance fall behind? The following details the 20 latest trends in the insurtech industry.
Gnawed by uncertainty of the next moment and magnified fears, humans demand safety from risks posed to their life and possessions. Insurance guarantees compensation in the event of damage or death, in exchange for a regular payment or “premium.” This definition and the notion of insurance leave room for ambiguity. Who determines the premium? How much damage is too much damage? What items may be insured? What is the method of payment? Why must I pay a premium if I am healthy? The rise of technology helps the industry provide honest answers to these questions.
The values of sustainability, fairness, and transparency define insurtech in 2024. A customer is loyal to a policy that predicts and prevents disaster, entails fair and realistic premiums, and involves the consumer in their decisions. Digitalization in the marketplace allows insurtech startups to find innovative solutions to traditional insurance activities, which attracts more investors to the field.
Consistent with a general socioeconomic trend, hyper-personalization and the lazy user’s desire for seamlessness pervades the realm of insurance. Heightened customer expectations push more and more insurance companies to rely on insurtech to fill in the gaps left by the corporate system. With access to all our data, and the cookies we buy and leave behind, insurance companies use technology to see all. Next time you are at a supermarket, debating to buy mandarins or chocolate-covered strawberries, know that your premium might be affected. While this enhanced individualism yields fairer risk assessment, our privacy hangs in the balance.
We expect our technology to be seamless. A customer in the twenty-first century cannot pay five different bills. Insurtech must consolidate all our expenses on one platform, creating an integrated insurance experience. This also helps the insured use their risk capital and time more efficiently. For example, if a customer takes a query up with a chatbot on the insurer’s website, they should be able to resume the same on a mobile-based application. A modern user needs modern continuity.
Another expectation, nurtured by years of overlapping media use, is the need for instantaneous information. Gone are the days people chased the postman for their mail. Automation, by feeding relevant information onto an intelligent software, clears a customer’s doubts within seconds. The easy access to facts returns power to the consumer, allowing them to make an informed decision. However, in a sense, our life is in the hands of our insurance provider. We should thus be able to trust them, a relationship built by genuine human interaction. Insurtech helps companies arrive at such an equilibrium.
Having established expectations from the insurtech industry and an idea of its future, the following list delineates the latest trends in the industry for the year 2024. Here’s how insurtech is jumping on the bandwagon.
Thanks to the combination of artificial intelligence and digitized claims management, insurers are now speeding up the process. With smart algorithms, they can quickly sort and prioritize claims, getting you the help you need faster - both reducing wait times for customers and lowering operational costs by up to 30%. Plus, AI helps insurers offer specialized micro-insurance plans, like coverage for farmers facing crop losses due to bad weather, making the insurance market more tailored and competitive.
God knows insurance paperwork is mystifying. One could drown in the number of clauses and sub-clauses, and it's not like agents are at our beck and call. The insurance industry strives to be meticulous, robotic almost. So why not let actual machines do the job? There was an insurance claim that was processed in just under three seconds with zero paperwork by Lemonade’s AI chatbot in 2016. In order to process the claim, AI Jim used 18 anti-fraud algorithms to verify its validity. He then wired the instructions to the bank, and just like that, in three seconds, the claim was cleared and closed. A process that could take a human one to seven business days. According to Simple Solve, it is predicted that 95 percent of all consumer queries will be handled by chatbots. AlphaChat and ChatFuel are two of the leading startups developing AI-driven insurance chatbots.
There has been an unprecedented rise in the use of wearable technology, from wristbands to chest bands, to take bodily measurements in the spirit of good health. As stated by Vicert, 92 percent of smartwatch users cite reasons for use as fitness and health. Whether it is your heart rate, frequency of exercise, blood oxygenation level, or sleep cycle, relentless observation yields a better evaluation of one’s overall health. You are less likely to go to the hospital if you are “fit,” and life insurance companies want to recognize that. Using data from these devices, insurance companies craft highly personalized packages, and may state relatively lower premiums. A win-win, barring the neuroses of constant body surveillance.
Say goodbye to clunky interfaces and confusing websites. Insurance companies are rolling out custom apps and online portals designed just for you. As consumer preferences continue to shift towards digital-first experiences, insurance companies are nor investing heavily in custom apps. These user-friendly platforms make it easy to manage your policies, file claims, and chat with agents all from the comfort of your phone or computer.
Insurance fraud is real. A man from Delaware, Nicholas di Puma, told his home insurer in 2008 that his house and convertible caught on fire in a cooking accident. A burning dishrag was thrown out the window, setting his car ablaze. In an effort to excavate another burning pan, he tripped, and a leather sofa ignited, setting di Puma’s home on fire. It comes as no surprise that he paid about $38,000 as a fine for attempted insurance fraud. Insurtech’s drones are a reliable tool for property insurance underwriters to assess the plausibility of claims. According to the US Federal Aviation Administration, 17 percent of all the commercial drones in the US are used for insurance purposes. Drones are used to monitor risk and evaluate damages. They are capable of taking photos, and videos, and capturing thermal images. They have an eye for detail, even detecting moisture trapped in roofs. But a drone was probably unnecessary to identify di Puma’s claim as fiction.
As Foucault says, “Knowledge is power.” From countless Hollywood movies yelling about data breaches, we have long known that data is an asset. In fact, according to Forbes, “Over the last two years alone, 90 percent of the data in the world was generated.” As we have insurance for our life, homes, and cars, it is essential for organizations to insure their data. As found by Fortune Business Insights, the global cyber insurance market is foreseen to grow from $12.83 billion in 2022 to $63.62 billion by 2029. An increase of almost 79 percent. A few renowned cyber insurance providers include Hiscox and AXA XL.
License and registration, please! But make it sci-fi. Biometric verification technology is commonplace in the insurtech industry to help companies improve their customer onboarding process and prevent fraud. By incorporating facial recognition, voice recognition, and fingerprint scanning into their systems, insurtech enterprises are able to verify a customer's identity with greater accuracy and speed. This helps to reduce the risk of identity theft and fraud during the onboarding process. In addition, biometrics can be used to authenticate a customer's identity when making claims or accessing their insurance policy information. This ensures that only the authorized individual is able to access sensitive information, adding an extra layer of security to the process. Aratek is one of the leading producers of biometric authentication technology, headquartered in China and completely backed by venture capital funds.
Why pay 12 months of premiums for an appliance you use once a month? Mobile applications that offer “on demand” insurance are proliferating in the industry. They have an accessible, natural user interface that asks for limited personal information to insure a possession for a limited period of time, a policy that may be deactivated at any moment. Trov is an American insurance application that announced its partnership with UFODrive, an electric car rental enterprise, in 2012. This technology eliminates any interaction with a broker or representative, enhancing the transparency between the policy and consumer. The lack of a long-term contract also takes the pressure off of a buyer’s decision. Another pioneer of this trend is an Israeli startup, Demandoo, that provides temporary insurance for freelancing employees.
In terms of automobiles, a user may receive discounts on premiums depending on how well and how often they drive their vehicle. Also known as “UBI,” usage-based insurance relies on tools like combined GPS technology and cellular systems that track the number of miles driven. In a foreseeable future of self-driven cars, it becomes very convenient to integrate personalized insurance packages to daily auto experiences. As we are surrounded by automation, it is important to remember that technology is not neutral. UBI raises several concerns about transparency in pricing. How many miles a day constitutes how much of a discount? And more importantly, UBI asks the question, are you willing to be surveyed in exchange for a concession? Do we prioritize privacy? It is essential to ask these questions before traditional insurance becomes a thing of the past.
What role does technology play in insuring those struck by catastrophe? As our planet heats up, unfortunately, natural disasters become more and more common. Synthetic Aperture Radar technology helps insurers stay two steps ahead of calamity. SAR is a technique that generates high-resolution satellite images at any given moment and weather condition. Because the technology uses microwaves, it can penetrate clouds and is unaffected by the sun’s rays, allowing insurers to predict and warn their clients against potential disasters.
Humans can be racist. We nurture certain stereotypes or schemas that help us organize the people of the world. This, however, marginalizes certain communities and is detrimental to their right to fair insurance. Underwriters assess how much risk an individual poses to their agency on the basis of which insurance policy is presented to them. It is a common stereotype that women are bad drivers. It is thus not outrageous to say that an underwriter might charge women a higher premium on auto insurance. Here is where AI comes in. Insurance companies often use artificial intelligence to crunch data and replace humans in the process of underwriting, allowing individuals an extent of freedom from worldly biases.
During the industrial revolution, humans redefined the concept of time. From the sun’s position in the sky, time became money. Songs became shorter. Trains became faster. Following the same trend, arguably, the duration of insurance contracts too became shorter. In short-term insurance, a customer may insure a car or personal effect for as less as one hour. The policy may be activated at any given moment by the customer, substantiating an undeniable trend in autonomy. Companies such as Aviva and RAC in the UK offer temporary car insurance with the promise of a “quick and easy” experience.
Peer-to-peer insurance technology is inspired by a shared economy. Groups of people pool their premiums for insurance against a specific risk. Depending on a group’s need, P2P insurance may cover travel, property, automobile, and health. Friendsurance is one such platform launched in 2010, where a claim may be made by one of the members, and others are notified with a small contribution to help cover the claim. While this reduces the individual cost of insurance and encourages safe behavior, P2P insurance may be incapable of handling complex claims.
Not only can artificial wear the cap of an underwriter, but the machine learning mechanism may be used to detect fraudulent insurance claims. In the USA alone, insurance companies lose $80 billion to fraud claims every year. As a result, they are forced to drive up premiums. Algorithms monitor data and identify suspicious activity, such as a claimant filing the same claim more than once or with a history of counterfeit claims. Unlike humans, artificial intelligence can compute multiple sources of data simultaneously and prevent unnecessary monetary losses for insurance companies. According to a study by Accenture, using AI to automate fraud detection could help insurers save over $7 billion in just 18 months.
Cue Gwen Stefani’s “Rich Girl”... If a burglar broke into your house, would you worry about your own safety or that of your Chanel slingbacks? Albeit, applicable only to the crème de la crème of fashion connoisseurs with lavish walk-in closets, wardrobe insurance might just be what the doctor ordered. From fur coats to handbags, living lives of aspirational consumption, it’s unsurprising for closets to be valued at over one million dollars. Insurance companies usually club fashion under the household items category. How could dish soap be associated with 6-inch heels? The American International Group, or AIG, launched a “wearable collections coverage” in 2015, intended to protect designer clothing.
As the insurance industry dives head-first into digitalization, insurtech is a silent partner, relied on to provide a technological framework to help automate the various stages of insurance. By investing in this new wave of change, insurers enhance customer experience, streamline processes, and gain a competitive edge in the industry. The digital infrastructure includes applications, chatbots, portals, analytics, etc. Based in New York, Lemonade is one such digital insurance platform that has completely embraced automation in the field, constructing a seamless user experience, a virtual hybrid of insurance and insurtech.
The year 2016 marked the launch of 125 new insurtech startups. Three years later, there were only nine new launches. Come 2022, total funding in this industry fell by 57 percent in just one quarter. Can one argue that we invented all there is to invent? Has research and development saturated? Many corporations are flowing the same technologies into the ecosystem, creating a trend of harsh competition. As artificial intelligence continues to learn from our data, scientific advances in machine learning are directly transferable to insurance technology.
The most frequently asked question before purchasing an appliance is undoubtedly, “Does this come with a warranty?” Embedded insurance is when insurance is integrated into a product. TV sets, laptops, microwave ovens, mobile phones, and cars, have an inbuilt insurance or guarantee for repair that sets the buyer’s mind at ease. A car manufacturer might offer an embedded insurance policy that automatically covers a car’s maintenance. This eliminates the need for customers to purchase a separate policy, creating a more convenient experience. Aligned with the trend of well-thought-out marketing (or lazy consumerism), embedded insurance makes for an efficient consumer experience.
The Asia-Pacific region is the fastest-growing market for insurtech, with China and India leading the way in relation to investment and adoption. India-based insurtech companies were one of the biggest fundraisers in 2020 and 2021. The highest funding, $319.3 million, was granted to Go Digit General Insurance. Insurtech companies in Asian countries may trace their success to the large market potential at their disposal. A growing middle-class population is in search for a fair and affordable insurance. How do you serve a large number of people with limited resources? The insurance of the future, enabled by technology, has a phenomenal democratic potential.
Partnerships between insurtech and insurance are perhaps the oldest trend in the industry. Traditional insurers have mastered the silk route, so to speak. They have solid distribution channels that modern insurtech startups may leverage to reach a wider customer base. Humans are creatures of habit. When a hip, new technology comes about, it is not in everyone’s forte to venture into unchartered waters. Conventional insurance companies have the credibility and trust of the masses, which acts as a buffer to the reform that insurtech brings to the field.
Insurtech gives us the infrastructure of reassurance. Instead of following an abandoned path, chatbots now give us directions, and insurtech helps everyday life be easier, more efficient, and even less expensive.
In this article, we’ve seen how amazing technology has been used so far to monitor our health in real-time so that any given insurance premiums are calculated based on the likelihood of negative health. Data collection now ensures insurance is a fairer and more tailored entity than before. We’ve also seen how insurtech can be used to detect fraud and dishonesty and therefore keep premiums lower in the long-run for businesses and consumers. We should brace ourselves, as even more is to follow in the future.
