What is InsurTech?

What is InsurTech?

What is InsurTech?
By 
Nick Gallo
May 12, 2022
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The steady expansion of InsurTech is changing the way insurers do business. New InsurTech startups represent innovative solutions that can increase your agency’s operating efficiencies and reduce costs.

These tools can improve everything from client acquisition and customer experience to underwriting. To take advantage of these benefits, let’s explore how InsurTech works, the types of solutions, and how they’re affecting the insurance sector.

What is InsurTech?

InsurTech is the cross-section between insurance and technology. Any technological solution that improves processes in the insurance industry can be considered InsurTech. For example, InsurTech  includes:

  • Predictive analytics tools that can sort through claim data to predict future losses
  • Automated chatbots on insurance websites that replace human customer service reps
  • Software that can automate underwriting to give faster and more accurate quotes
  • Smartphone apps and online platforms that let consumers rapidly compare products

These types of tools help insurers fulfill key business functions more efficiently and at a lower cost. Consumers can also benefit from them with an improved customer experience, and insurers may choose to pass on some of their cost savings to consumers.

For example, commercial insurance providers can now use digital wholesalers like Pathpoint to quote and bind instantly. Clients are happy to get an insurance quote from their agents faster, and agents can benefit from higher customer satisfaction.

Types of InsurTech

InsurTech is a continually expanding industry that encompasses different areas of innovation. Here are a few examples of InsurTech, from the fundamental to the cutting edge.

Digital customer interfaces

The transition to digital customer interfaces is one of the most straightforward InsurTech developments, but that doesn’t make it any less significant. In fact, it’s one of the tools that insurers can least afford to ignore.

Consumers take for granted the ability to shop for solutions online. They don’t have patience for talking on the phone, and demand smartphone apps and digital marketplaces from service providers.

Blockchain

Blockchain technology has received attention because of cryptocurrencies, but it has other business uses. Most notably for the insurance industry, it can help automate transactions while maintaining robust security.

For example, insurers can use blockchain technology to code their policies as smart contracts that automatically pay when agreed-upon conditions are met.

The Internet of Things

The Internet of Things (IoT) is another useful type of InsurTech. It refers to objects, like cars, televisions, and watches becoming connected to the Internet. Insurers can use that connection to gather unprecedented levels of data.

For example, agents that offer commercial property insurance can use sensors to get real-time alerts about covered buildings or predict equipment malfunctions before they happen.

Artificial intelligence and machine learning

Artificial intelligence and machine learning are perhaps the most promising insurance technology. Unsurprisingly, software that can perform multiple complex functions that otherwise require a human has limitless applications.

For example, these technologies can facilitate highly advanced data analytics. Insurance companies collect massive amounts of data from their clients, and these tools can help forecast risks and inform decisions.

How InsurTech is Transforming the Insurance Industry

The wheels of the insurance industry turn slowly, but InsurTech is already transforming the sector. InsurTech startups are using innovations to compete with corporate giants, and even the most traditional insurance companies can’t ignore the advantages of modern solutions.

Agencies that embrace technological advancements are becoming more efficient and effective while cutting costs. They’re creating better customer experiences, accelerating and automating underwriting, and distributing their insurance products digitally while spending less.

However, there’s still some resistance to the digital transformation of insurance, and some of it is warranted. For all its impressive potential, there are downsides to InsurTech adoption.

For example, choosing the right technology to invest in can be overwhelming due to the countless options. Once your agency commits to adopting a new tool, it can take years to incorporate it into your insurance business, and it can cause significant disruption to your other systems.

As a result, you’ll likely encounter resistance while advocating for InsurTech adoption in your commercial insurance agency. The benefits make it worthwhile and you can overcome those internal barriers with proper preparation.

How InsurTech Helps Commercial Insurance Agents

As a commercial insurance agent, you may be concerned that InsurTech poses a danger to your position. After all, artificial intelligence and digital interfaces are making it easier for consumers to shop for policies and get answers to their questions without relying on a human agent.

While that’s true, it doesn’t mean your role is becoming obsolete. Rather, it means you can use technology to automate the routine aspects of your job and spend more time serving customers in valuable ways that InsurTech can’t replicate.

As a result, the more you embrace technology, the more your customers will benefit. Some of the most valuable tools for commercial insurance agents include:

  • Digital marketing solutions that can help you attract more and better-suited customers
  • Customer self-service tools that save you time and improve the customer experience
  • Underwriting software that lets you instantly quote and bind, reducing your risk of losing prospective clients

There are countless InsurTech solutions, but your resources are limited. As a result, you must prioritize the tools that will generate the greatest return on your investment. Your client acquisition, customer experience, and underwriting are among the best functions to target.

5 InsurTech Companies Providing Innovative Solutions

Now that you have a better understanding of InsurTech and its capabilities, you may be interested in putting it to work for yourself or pitching it to your agency leaders. If so, here are some InsurTech companies providing innovative solutions you may want to consider:

  • Pathpoint: An open, digital E&S brokerage that quotes, binds, and issues across multiple carriers.
  • Bold Penguin: A one-stop shop for automated underwriting software, lead acquisition, and digital distribution of products.
  • Tarmika: Underwriting software for independent commercial agents that returns multiple quotes with a single entry.
  • Pie Insurance: Quoting software specializing in helping agents get workers’ compensation insurance coverage for small business clients.
  • Zego: Policy management software for insurers who want to offer commercial fleet insurance.

Gain Competitive Edge With InsurTech Solutions

InsurTech is already transforming the insurance industry, and new technologies emerge daily. Consider your business's most significant growth opportunities and start persuading other industry professionals to adopt InsurTech solutions.

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