For the majority of people fintech will be a familiar term and industry, but hot on its heels is another growing sector looking to challenge the status quo of the established players – insurtech.
Experiencing firsthand how the insurtech industry is evolving in Ireland is specialist recruiter, Andrew Murphy. Andrew is the Director and Co-founder of Coopman Search and Selection, a financial services recruitment company for accounting, finance, risk and compliance opportunities.
Andrew partners with fast-growth insurtech start-ups establishing and expanding their operations in Ireland, providing recruitment and consultative services to build high performing teams within these companies. Andrew explains how insurtech is changing the insurance market as we know it and introduces some of the up-and-coming key players.
Insurtech refers to the use of technological innovations to redesign the current insurance model, looking to seek more savings and efficiency.
Venture capitalists are betting that the insurance industry is ripe for disruption as the more established firms have been in existence for as long as 300 years with very little change to the way they offer their products. Through innovation and artificial intelligence (AI), insurtech companies are looking to offer ultra-customised policies, social insurance and dynamic price premiums.
Traditionally, insurance works by applying broad actuarial tables to assign policy seekers to a risk category, putting enough people in similar categories to make the policies profitable. These policies are then signed up to on a long-term basis with little room for manoeuvre in the policy.
How insurtech is changing the game
Insurtech will tackle this on two fronts. Firstly, by looking at big data and pricing products more competitively. This is done through AI, incorporating blockchain and leveraging the internet of things (IOT).
Insurance by definition and as explained is built on risk and making predictions of how big a risk a company, person or event is. The more information an insurer has about the consumer, the more accurate the prediction. AI is capable of analysing data and situations faster, increasing accuracy and enhancing customer customisation.
Blockchain is inherently safe. As a result, once the insurance industry fully integrates blockchain, insurance companies can quote rates for new clients faster than ever before. The traditional model where the company has to gather records from various sources will prove unnecessary. The data can move directly from one party to the other, further enhancing transparency and eliminating human error.
The IOT deals with connecting non-traditional devices to the internet. Insurtech start-ups are taking advantage of this aspect to access more data about potential clients via devices such as smartwatches that provide real-time online data.
Secondly, insurtech is providing on-demand policies where customers can purchase insurance for their home, car and travel when they actually require it. This on-demand offering is still in its infancy with only a 1% share of the global insurance market, however given millennial’s willingness to purchase usage and on-demand products, it is expected that this offering will become more mainstream in the Irish market once it can meet the needs of the majority of customers.
Key players in the insurtech space
Lemonade claims to be the “world’s first open-source insurance policy.” Headquartered in New York City, USA, the company offers homeowners and renters insurance powered by AI and behavioural economics and successfully listed on the NYSE in recent weeks.
Companjon is a new and innovative start-up headquartered in Dublin, operating across Europe and is a well-funded corporate venture offering fully digitalised insurance products to the experience sectors such as travel.
Zego is an on-demand insurtech company headquartered in London, offering flexible insurance cover for food and courier delivery drivers when they are working.
Slice provides pay-per-use insurance for the on-demand economy. Founded in 2015, the company offers an insurance cloud service platform that caters to the gig economy.
Quantemplate is a London-based insurtech firm that offers machine learning, data transformation and analytics solutions for insurance professionals. The insurtech business is supported by leading investors and financial and insurance companies such as Anthemis, Transamerica and Allianz.
What the rise of insurtech means for Ireland
Depending on the success of insurtech in the coming years, we could witness what is anticipated to happen in Ireland with fintech, that is that the major insurance companies will create partnerships. Insurtech partnerships could enable insurance companies to position themselves as dynamic, connected, and potentially disruptive – helping them to rise above their current image.
What’s more, the prospect of being part of the adoption, enhancement and development of innovative technologies may assist with employee attraction and retention in Ireland. Employees are more satisfied when they have opportunities to upskill and learn at their own pace. The innovation that is closely associated with insurtech focuses on constant learning and growth, so it will be interesting to see how the insurtech industry develops and impacts the talent market.