In order for insurance companies to remain competitive, they must embrace change through technological innovations. Since insurance companies are part of one of the most antiquated industries in the world, many of their legacy systems and processes tend to get in the way of progress. However, as new products and services are continuing to be unveiled at an accelerated rate, CTOs and investors are increasingly understanding the value offered by InsurTech.
Technological Transformations in Insurance
Insurance companies worldwide are experiencing technological shifts and business transformations that affect both their internal processes and external positioning. They use design thinking methodologies and other techniques that have recently been linked with disruptive industries to increase customer engagement, while in other cases they have implemented new technologies to improve the bottom line. As an example, AI is used to increase efficiency and cut costs by replacing traditional models. Simply put, the insurance world is ripe for disruption, and InsurTech is proving to be one of the most disruptive verticals.
Rise in Interest
The growing demand for technology on the corporate side has led to a variety of solutions being offered by tech startups. These products and services are positively impacting every link in the insurance value chain, most notably for:
- Maximization of transparency
- Simplification of processes
- Customer service/experience/empowerment
- Lessening friction
- Fraud detection/minimization
- Employment of big data
Due to the sheer amount of financial institutions based in New York, a great concentration of the InsurTech companies that are catching the attention of investors and corporations are based in New York City. According to Forbes,
“New York City, in particular, has differentiated itself as the new capital of insurance technology (aka InsurTech), playing home to disruptive players in the property, casualty, health, auto, pet, SMB, disability, and life insurance verticals.”
InsurTech Startups in NYC
Many of the most innovative NYC-based InsurTech companies are quickly claiming their piece of the pie in the trillion-dollar insurance industry; each covering many unique verticals.
CoverWallet, founded in 2015, has gained the attention of numerous investors through its easy-to-use platform. The $28m in funding has helped it serve small businesses with a full range of insurance using a unique concierge-like service. PolicyGenius did what Kayak has done for the travel industry and what PriceGrabber did for online shopping. It allows consumers to compare policy prices quickly, explore coverage options, discover gaps, and review available solutions. It was founded in 2014 and is valued at over $51M. Another InsurTech startup is Oscar, valued at $2.7b. Oscar is an insurance provider that combats the complexity of buying insurance. It utilizes big data for improved underwriting and emphasizes UX to build an online platform that allows individuals and businesses to get health insurance through a humanized experience.
With several companies valued at over a billion dollars, InsurTech companies are not just disruptors anymore – they are the incumbents. Industry leaders who are solving challenges from the driver’s seat, i.e. the traditional insurance firms, must respond to stay in the race.
The Right Tech on a Silver Platter
Thanks to their tried and tested data-driven and AI solutions, InsurTech startups have the edge that insurance companies need in order to stay ahead of the curve. This leads to fruitful collaborations as the startups can provide solutions that would take corporations months and sometimes even years to design, build, and implement. The agile nature of the startups allows them to disrupt antiquated industries and implement new solutions quickly and more effectively. Furthermore, besides offering a business opportunity for startups, having access to corporations allows young companies to design solutions based on the real demands of the corporation, making their offering more valuable and easier to adopt.
From automating business processes, to distribution, to even selling insurance on blockchain – InsurTech startups are paving the way to success for insurance companies worldwide. Although NYC is emerging as the new capital of InsurTech mostly because of the proximity and access to financial institutions, Israel is not far behind, as evidenced by recent companies that have emerged there such as Lemonade and Nexar who use AI to reduce insurance costs and improve customer engagement.
Now more than ever, it is crucial for the leading teams in insurance companies to begin the discovery phase and look into the variety of InsurTech startups and offerings that would offer the best fit for their needs. One of the best practices while doing so is ensuring that a trusted authority plays a strong role in making the necessary connections, to ensure peace of mind in the knowledge that the startups will deliver as promised at scale. From that point forward, proof-of-concepts can be established, followed by the adoption of the technology, then the ultimate goal: relevance, longevity, and success.