The rise of Insurtech
Although the term Fintech (Financial technology) was first used in the 1980’s in the Sunday Times by business letter editor Peter Knight, it seems to have entered the common vernacular after the 2007 financial crash. The meaning has changed over the years, but now describes any tech venture related to finance. Fintech is now one of the biggest growth industries.
The origins of Insurtech (Insurance Technology) are more vague, but it is a branch of Fintech. Friendsurance in Berlin started one of the first identified Insurtech companies in 2010. These companies typically embrace new digital technology to improve efficiency and more accurately assess risk - in the Insurance industry. Key to the ‘tech’ part of Insurtech is that they apply to a growing economy where information or data is the most valuable commodity.
Insurtech companies are motivated by their perceived need for innovation and disruption of the traditional, complicated and pricey Insurance industry. They focus on what the consumer wants, which they believe to be personalised insurance, and use technology to deliver an improved and creative user experience to their clients.
Insurance is an old business and one which has traditionally been very, well, traditional. It is about risk, and about being cautious, and it is heavily regulated. So the Insurtech companies’ use of data, digital innovation, new design and machine learning to tailor insurance more accurately, as well as to offer it to consumers more cheaply, is likely to have a sizable impact on the industry.
Risk categories can be more accurately assigned using new technologies available. Rich data analysis allows companies to offer more tailored products to clients, and they also offer pick and choose policy options, not the traditional one size fits all approach. Premiums can be priced more competitively, as the technology allows much of the inherent cost associated with insurance to be done away with. Operational costs are cut – again by technology – and cheaper, more trackable online marketing through social media channels replaces large external marketing costs.
Although still in its infancy, there is growing investment in Insurtech startups by Insurance companies, and funds being raised by VC firms. Good news for the Insurtech sector, and thus for the consumer.
So choose well. Simply is an Insurtech company that saw the need to offer simple, easy life Insurance options to all South Africans. Simply uses technology to make it more affordable for the mass market to get Insurance. The product is easy to buy, easy to understand, and transparent. A client can either choose a combo package of life insurance, funeral Insurance and disability Insurance, or only the parts needed – www.simply.co.za