Insurance is one of the oldest financial businesses, with many standard operating procedures and traditional methods. Most insurance business models in the past have used broad tables of data that group together a lump of people based upon different risk factors. The categorization of consumers based upon shallow levels of information results in some people having to pay more than they actually should, while the company’s main focus is to keep the policies profitable for the company and minimize their risk.
PWC states that insurance firms must demonstrate their willingness to adapt to the rising new insurance era in order to play as a frontrunner in the industry. Beforehand there were few differences with benefits and services, making it suitable for disruption by insurtech. According to Investopedia, insurtech is the use of technology innovations to generate savings from insurance models more efficiently.
Startup companies are taking advantage of this change in the industry to develop new services and investment opportunities. Insurance firms are looking to startups to help them drive this desired innovation. Insurtech aims to battle these issues in the industry by taking in more specific components of consumer data and statistics to fabricate products that are more accustomed to an individuals lifestyle. Thus, revolutionizing the insurance industry and changing how insurers do business through the use of disruptive technologies.
The development of insurtech also creates a more competitive environment in the industry. CEO of InsureVite, David Yeng, explains how the market share for insurance companies, that are not making changes, is eroding over time as more people are becoming disconnected with the need for insurance. The gap of this disconnection is seen as more significant within the younger population, viewing insurance as too costly and outweighing any potential benefits.
The company, InsureVite, aims to bridge this gap of disconnection between the customers and the insurance providers. David Yeng describes his company as the “String of communication between consumers and the insurance providers”. Using AI technology and chatbots to advise the most useful information in a more timely manner. This allows consumers to easily connect with their insurance providers so that they may demand products that reflect their lifestyles more accurately and efficiently than ever before.
By connecting individual lifestyles to insurance, the gap of disconnection can be bridged and insurance firms can adapt their business models to the upcoming and changing market. Allowing products to better reflect a consumer’s everyday life rather than having to settle for costly products that are not specialized for individual needs. Insurtech will motivate insurance companies to open up to new methods and practices towards customer service, developing tailored products, and other offerings.