Insurance technology or InsurTech describes the further development of the insurance industry through new technical systems and alternative business models. The companies that operate in this sector are called InsurTechs and encompass segments such as peer-to-peer insurance (P2P), health & e-commerce insurance, contract management etc. Through innovative solutions, InsurTechs disrupt currently established processes and enable more flexible, user-friendlier and faster services.
From my experience working in a bespoke software development company, I know that innovation drives the economy forward. That is why innovation-driven software solutions are crucial for establishing new industry standards and securing competitive advantage in highly saturated open markets. InsurTechs divert a great deal of public attention on themselves and attract incumbents, entrepreneurs and investors to take a closer look at all the possible use cases. Let’s explore the top seven InsurTech trends to look forward to in 2021:
1. Customer-centric Solutions
Generally speaking, the interdisciplinary sector of InsurTech originally tried to get the best of both worlds – traditional insurance and innovative technology. Putting the end-customers needs and meeting ever-increasing demands was a top priority from the early days back in the 2010s. Field experts recognised that younger generations enjoy a personal touch to everything – from their to-go coffee cup to their phone cases and replicated this model to create new attractive insurance products.
After it became clear that the one-size-fits-all approach is no longer feasible, new challenges began to emerge. Developing appealing products with an individual touch that are desirable right now and remain relevant in the near future is not an easy task. Hassle-free interaction with your digital insurer, a click away from filing a claim or tracking a policy status – the doors to the era of on-demand services have just opened, and there is no turning back.
2. Embedded Insurance
Embedded insurance is about to become the next big thing in the insurance sector, contributing to the broader concept of embedded finance. You guessed it right – this trend leans towards buying insurance together with your purchase, e.g. a new car. Embedded digital services became increasingly popular during Covid-19 and now include native features that make life easier.
To continue the example of purchasing a new vehicle, with the embedded insurance feature, the buyer automatically receives mobility insurance. The same goes if your purchase a new smartphone – then you get theft and damage insurance that comes with your new mobile device. The idea is to make the customer journey less complicated and more carefree because nobody wants to read complicated insurance policies, but at some point, everybody inevitably needs some type of insurance.
3. No-Code Development Methods
The no-code model describes an environment for software development that enables developers to create application software via graphical user interfaces and configuration instead of traditional programming using code. No-code platforms are closely related to low-code platforms as both are designed to speed up the application development process by using the drag and drop method to build app components.
No-code production tools are well suited to help insurance companies advocate for a more customised consumer interface. No-code tools boost creativity and push existing boundaries by empowering citizen developers (employees without tech skills or prior programming knowledge) to also engage in the creation of innovative InsurTech applications.
4. Artificial Intelligence
Artificial intelligence, or AI, is not a new trend but remains perfectly relevant in 2021, and experts predict that it will continue to invade the software development process to an even greater extent. First and foremost, AI can help streamline various processes by automating existing processes and simultaneously boosting accuracy and speed.
For example, in the traditional insurance sector processing a property damage claim by a person might become obsolete because mobile apps can now radically speed up or even eliminate manual processing altogether. Underwriting, potential fraud detection and high-quality risk assessment are other processes within the InsuchTech industry that AI can have a huge impact on.
5. Blockchain Technologies
Many people only associate blockchain technology with cryptocurrencies and crypto trading. While these use cases might be the most widespread, blockchain carries the potential to disrupt the insurance sector. For instance, Deloitte identifies inefficient information exchange, limited underwriting accuracy and fraud risks as severe pain points and explains how blockchain can address them adequately.
A major use case of blockchain technology in InsurTechs is preventing data misuse and thus increasing protection. This can easily be achieved by knowing the essence of this technology. Essentially, blockchain represents a continuously expandable list of data records, called blocks that are linked to one another using cryptographic encrypting. Once a block is created, it can no longer be modified, tremendously increasing app security.
6. Behaviour-based Discounts
Yahoo Finance reports that behaviour-based discounting is expected to be a trending approach within InsurTech firms in 2021. The concept shares similarities with data-driven insurance and revolves around rewarding “good” or “desirable” behaviour with special discounts. For example, non-smokers can receive lower insurance prices than smokers.
Drivers with clean driving records can also enjoy better insurance conditions than risky drivers with previous offence records. While such discounts can collectively apply to whole client groups, in 2021, it is all about promoting specially tailored discount depending on individual behaviours. These may include using smart sensors or IoT devices that track and store personalised data and make better predictions.
7. Digital Platforms
2020 made it clear that we’ve evolved as creatures and can operate even under highly stressful conditions. Thankfully, during Covid-19 lockdowns, we realised the true potential of channels for distributing digital products and services. In 2021 the uncertainty remains, and insurers adopt new tech solutions for agents and brokers or switch to digital platforms exclusively.
The only way to stay relevant is to adopt new approaches and resist the urge to stick with traditional models that no longer serve your clients. Everyone enjoys flexibility in service, and if a claim can be filled out from home using your smartphone, why waste time waiting in lines just to file a single claim? Authentication methods such as face recognition and electronic signatures will continue to be relevant and gain popularity in future InsurTech apps.