Insurtech—the new force taking on the insurance industry
Find out everything you need to know about Insurtech, the new disruptive force shaking up the insurance industry and how it might affect you.
3 min read
You’ve probably heard of fintech, the technology startups disrupting the finance industry. Well, the insurance industry has a term for its disrupters too—insurtech. While it’s still in its early stages, there are lots of exciting changes coming for customers and insurance companies alike.
What is insurtech?
Insurtech is the term given to companies who are using technology to innovate and disrupt the insurance industry. As you might have guessed, it’s the meeting point of ‘insurance’ and ‘technology’. It’s been popularized by new, disruptive companies and products that capitalize on the inefficiencies of older, established providers. Today, there are startup incubators dedicated to just insurtech, and larger companies are collaborating with startups to update their offerings.From mobile apps to big data and AI, the leading insurtech companies use a range of innovative tools to shake up the insurance industry.
How does insurtech work?
The technology that insurtech startups use can really vary. But they all have one goal—to rival big, established companies and grow their market share by solving problems for customers. Compared to other industries and products, the slow, cumbersome processes of the traditional insurance models leave many customers dissatisfied. Today, people want to be able to buy their travel insurance with a tap of the finger, not work through stacks of forms. Insurtech startups recognize this and want to do something about it.
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Traditional insurance models work by sorting customers into groups by their risk category. These groups are pretty broad, which means that some people in the group will end up paying more for their policy than they should. By contrast, insurtech startups are trying to use real data, instead of statistical models, to create smaller, tailored risk categories. This makes it easier for them to offer a more competitive pricing strategy.Cheaper insurance is great for customers, but there are other benefits to insurtech when it’s done well. These include products and platforms that are faster, more intuitive, and tailored to the individual.Here are some other ways insurtech companies are changing things up:
Using data from wearables and social platforms to create more tailored policies
Pivoting away from hard copy documents and instead using online forms and digital signatures to keep the process easy and accessible
Bringing together disparate policies and products onto one, easy-to-use platform—like mobile apps
Harnessing AI to take on tasks that were formally done by an insurance broker
Why is insurtech important?
Even though the insurance industry is a tightly regulated, complex business with many legal obligations—exciting changes are starting to happen. First, there’s the potential to make pricing more competitive. Other people’s risk categories shouldn’t impact the amount you pay for insurance. Insurtech makes it possible for your insurance to be tailored to your own health, finances, lifestyle, and personal priorities.There’s also the potential to process and settle claims more quickly, improve the industry’s infrastructure, and introduce scenario-based policies. Wouldn’t it be great to borrow a friend’s car for an afternoon and get insurance coverage with just a swipe of a finger?As other areas of our lives are improved by the technological revolution—banking, healthcare, communications—why should insurance be left behind? Some people may find insurance boring, but it’s an important way to protect your financial future—so the more accessible it is, the better.
Is insurtech easy to use?
As with any advance in technology, improving the user experience and the user interface of digital products is a key part of insurtech. Many startups are focused on getting customers to the right product as quickly as possible. This helps customers avoid complicated forms and long hold times on the phone. Unless you struggle with technology or have a need to communicate often with a broker or financial advisor, you will likely find insurtech the easiest option to use.
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"When it comes to insurance, customers today still have to contend with complex and outdated processes and paperwork,” says N26’s co-CEO and co-founder Valentin Stalf. “The space has long been ripe for disruption, and we are now offering a one-stop digital solution for our customer’s insurance needs.”At N26, we’re taking the best of fintech and insurtech and putting it together in one beautifully simple app. Check out what insurance plans your N26 account already covers, or see what policies are available to you by going to the app’s “Explore” tab and choosing the N26 Insurance section.
Insurtech is the term given to companies and products that are using technology to innovate within the insurance industry. It comes from joining ‘insurance’ and ‘technology’, much like the word ‘fintech’. In fact, some people would describe insurtech as a subset of fintech. The technology used can vary, but the common goal is to make products that are more tailored, competitive, or easy to use. Many insurtech startups are starting to hit the market and growing quickly.
Insurtech uses technology to improve insurance products, innovate the sector and drive more efficient companies. The tech used varies, but could include big data, artificial intelligence (AI), lifestyle data from wearable technology, apps, the Internet of Things, and more. An insurtech product or company will use these inputs to make their policies more tailored and convenient for the customer. It’s all about getting away from dealing with insurance forms, spending hours on hold to make a claim, or paying more than you need for your coverage.
The insurance industry isn’t easy to disrupt. It’s a heavily regulated industry with strict legal responsibilities and regulations. This can cause large, established companies to be weary of using insurtech. For them, change takes time and carries a lot of risk. Whether it’s handling sensitive customer data, making sure systems don’t crash, or underpricing policies to look competitive, there are a few reasons why not all insurers embrace insurtech.
Insurtech is bringing an old, slower moving industry up-to-date, for the benefit of both customers and companies. If top insurtech companies can match customers to more tailored policies, then fewer people will be paying more than they need to for insurance. That makes managing the risks of day-to-day life, while protecting your financial future much easier. There’s also the convenience of being able to manage your coverage from your smartphone, so you can get insured while on- the-go.
Some N26 accounts, like our N26 Metal and N26 You accounts, already include insurance for travel, mobility, and winter sports. If you‘d like phone and car rental insurance too, the N26 Metal account might be for you. But if you’re an N26 customer and don’t have a premium account with us, don’t worry—you can still get insurance on-demand. Just tap on the “Explore” tab in your N26 app and choose “N26 Insurance” to see your options.
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