A good reason to get to grips with the insurance industry a bit more intensively in preparation, which has so far only been marginal in my blog. So it is a good thing that in this area of the big and increasingly colorful financial world is doing a lot in terms of change. Here is a short first look at the happenings.
Quotation, form filling, and analysis by the insurer. These are the three steps a person needs to go through to get insurance – and usually the reasons why over 80% of the second and third world countries population have no insurance at all.
This is because, as traditional companies impose a lot of bureaucracy and make it difficult for consumers to understand insurance. These steps end up taking a long time to complete – which increases the value of plans and creates many headaches for contractors.
This is why many people view the insurance market with ‘bad eyes’ and choose not to have insurance. For them, it is easier and more comfortable to take risks than to undergo so much bureaucracy.
But in recent times, this market is undergoing a major revolution. Thanks to Insurtechs, many people are saying goodbye to all this paperwork and benefiting from the simple, fast and cheap insurance (life, travel, auto, residential, as well as property damage liability insurance among many others).
The power of Insurtechs
The insurance industry has remained the same for over 100 years.
By offering a service that is essential to people’s lives, insurance companies did not care much about the technological evolution. Their managers felt that even as these developments occurred, the hiring of services would not be affected.
This idea made sense until the time Insurtechs began to hit the market. Their great promise is to reduce bureaucracy in all processes, from finding the ideal insurance to renewing it through new technologies.
And since they came into the market, Insurtechs have caught the attention of consumers. After all, who doesn’t want to:
- Get rid of the bureaucracy imposed by traditional insurers?
- Get rid of piles of paper to read, (try) understand and sign?
- Hire plans over the Internet from desktops, tablets and smartphones?
- Get insurance and start benefiting from them in no time?
Who most felt the impact generated by Insurtechs was certainly the traditional companies. According to PWC, 3 out of 4 insurers believe part of their business is at risk of disruption because of these startups.
But after all, who is being affected by the Insurtechs?
With Insurtechs, consumers can get insurance simply, quickly and cheaply over the Internet. They do not have to read numerous papers, spend hours talking to the insurer’s staff, and wait weeks to get their policy.
The traditional companies
Insurtechs are offering traditional insurers the opportunity to meet consumer needs, reduce costs, and improve their processes. That’s why many are already investing, acquiring, and or partnering with these startups.
The insurance market and the economy
Because they are cutting red tape on the insurance industry, Insurtechs are attracting more consumers. They are also encouraging more startups to enter the market. This helps the industry become increasingly innovative and technological and grow, which also benefits the economy as a whole.
Many Insurtechs are attracting the attention of national and international investment funds. This is because their growth rate is very attractive. And anyone investing in them now will surely reap good rewards in the future.
Blockchain as a crucial disruptor
Special mention has been made of Blockchain technology, which has both the potential to disrupt the insurance industry dramatically. Also, opportunities to increase efficiency and reduce costs, not to mention the ability to create entirely new services, value-added, and business models.
With Blockchain technology, the central intermediary (bank, insurance, notary, etc.) can be replaced entirely. The secure, comprehensible and trusting exchange of all forms of values is decentralized and p2p. In this respect, Blockchain can be described as the Internet of Value, which is also an essential requirement of the Internet of Things.
According to a 2014 study, Blockchain technology alone will enable numerous breakthrough innovations in private insurance:
- It will dramatically change the way personal information is archived and distributed. Personal data or identity management systems are used and used flexibly by consumers themselves.
- Insurance products can be adapted to personal and local situations. Completely new p2p insurance products will emerge. Global scaling is extremely simplified.
- Processes are increasingly automated and even triggered by systems. Once a testament has been created in a blockchain, it is automatically converted at the time of death. Temporary insurance is possible over very short periods of time and can be secured via the blockchain. The number of potential disputes will be drastically reduced.
- People will be able to use their own pooling systems. Collaborative models are possible in the form of mini insurers or other mutual protection.
At the moment, it is not clear what effects Blockchain will have on the world, but many experts regard the technology as more disruptive than the Internet itself.