Insurtech companies, mostly startups, have become benchmarks for large insurance companies that want to adapt to the radical change in demand in the insurance industry, which has been accentuated by the Covid-19 pandemic. This means a change in the business model to offer insurance as a service, simple to contract, transparent and practically personalised for each customer. The digital transformation of insurers involves insurtech companies, and investors are clear about this: between 2017 and 2019 the insurtech ecosystem has received 6.3 billion dollars globally.
What is insurtech and what types are there?
Insurtech is the acronym for insurance and technology. To understand what insurtech is, think of a traditional insurance company and now add all the possibilities offered by new technologies such as Artificial Intelligence, the Internet of Things, Machine Learning and Big Data. This is a term that encompasses all those companies, many of them startups, that have taken advantage of the digital transformation of the insurance industry to offer their customers innovative solutions within the insurtech as a service model.
The main advantages of insurtech companies are greater efficiency, transparency and agility for customers, as well as the ability to adapt quickly to changes in the industry. Within the ecosystem established in the insurtech map of Santa Lucia, of which WFN is part, there are two main types of insurtech:
- By product type. There are car, death, home, property, life, investment, health, silver economy and travel insurance, among others. These products offered by traditional insurers have evolved to improve the user’s experience and have become practically personalised policies that are much more useful, convenient and faster. Startups have achieved this through the implementation of technologies and trends. These are known as insurtech business models.
- By type of infrastructure. Insurtech companies are also classified depending on the type of support for the technological development and maintenance of the companies. They can be Value Chain, Big Data, Blockchain or Customer Experience.
According to the latest study prepared by Everis and NTT Data, between 2017 and 2019, the Insurtech ecosystem has received 6.3 billion dollars worldwide. Insurers’ investment in startups in this industry (insurance, financial services and healthcare) was 56 % in 2019, while in the period 2010-2019 it was 31%. At the same time, by the end of the third quarter of 2019, cumulative investments for the year reached USD 3.26 billion, setting a new record, according to Deloitte’s 2020 Insurance Outlook Report.
Insurtech in the USA
On the US insurtech map, here are four startups worth keeping an eye on.
Lazarus AI. This application improves the early detection of cervical, skin and ovarian cancer thanks to Artificial Intelligence and electronic health records (EHR). This reduces the mortality rate to less than 4 %, compared to the current mortality rate of 40 % for cancers in all settings. This also reduces the cost of treatment tenfold.
- Relay. It is a collaborative platform for insurers. It helps operators manage and sell the best insurance. It also eliminates duplication, sends alerts with the latest opportunities and trends.
- Spot. It is an application aimed at those who live an active and adventurous lifestyle. Spot makes it possible for people to purchase monthly or even shorter-term policies easily and at an affordable price.
- Flock. Provides the world’s most advanced real-time quantified risk assessment for drone flight. They are a London-based, venture capital and government backed insurtech startup pioneering the use of Big Data to intelligently price insurance. Flock has formed a global partnership with Allianz, the world’s largest aviation insurer, to launch its first product ‘Flock Cover’: a pay-as-you-fly insurance and safety app for drone pilots.
Insurtech in Latin America
Despite being a year marked by the Covid-19 pandemic, the insurtech industry accelerated its growth during 2020 in Latin America: only in the first three months, 10 % more investments were made than the previous year, according to a research by Digital Insurance LatAm on insurtech LatAm. At the same time, the number of companies in the industry has increased and collaboration between them is expected to grow by 2021.
Among the factors influencing the growth is a clear change in demand with the adoption of new consumption habits and the incorporation of more people into these habits. According to Capgemini and Efma’s World Insurtech Report 2020, more and more people are consulting or taking out a policy from a digital platform. In addition, digital native insurance companies are more prepared to adapt to this change in demand with a product that is totally focused on the final customer.
Within the LatAm insurtech map there are a large number of startups worth keeping an eye on, among which the following stand out:
- Bima is the leader in mobile insurance delivered in emerging markets. Launched in late 2010, Bima currently reaches seven million people in eight countries in Africa, Asia and Latin America, including Ghana, Senegal, Tanzania, Mauritius, Bangladesh, Sri Lanka, Indonesia and Honduras.
- ComparaOnline is the leading price comparison site for insurance and financial services in Latin America.
- Puntored is one of Colombia’s leading fintech as a service in digital payments and correspondent banking, bringing financial and transactional services to people in rural and low-income areas in Colombia.
Insurtech in Spain
During 2020, up to 87 new initiatives have been incorporated into the Spanish insurtech map, which totals 247 players and 7 corporate initiatives. Most of them are included in the Spanish Fintech and Insurtech Association. These are the most relevant:
- Mitek. The large software company specialising in digital identity verification and mobile capture based on artificial intelligence algorithms.
- SingularCover. It offers tailor-made insurance for SMEs and the self-employed. With the coverage that each business needs in a personalised way and specialised advice.
- WorldFuneralNet. It is the first digital platform for bidding on funeral services and transfers by insurers worldwide. It is the essential tool for funeral homes that want to grow their business by accessing hundreds of tenders published by insurers, companies and groups quickly, transparently and easily through the Dutch auction system and full traceability of the service.
- Gocleer. It is an insurtech that allows 100% digital contracting of car insurance with a “cashback” programme through which private drivers, who use their vehicle little or combine it with alternative means of transport, can get up to 30 % back on the annual value of their insurance.
- Cobertoo. An insurance platform designed to offer insurance plans for mobile phones. The company’s platform is based on a People to People (P2P) insurance model with product contracts, monthly billing, policy issuance and faster claims handling, offering customers easy, transparent and collaborative mobile insurance.
- Cleverea. It aims to become the go-to place for first-time insurance buyers, revolutionising the way they perceive, buy and consume insurance. At the moment its policies are focused on travel insurance adapted to tourism enthusiasts, but also to digital natives who can telework from anywhere in the world.
- Elma. Its technology is aimed at streamlining doctor-patient communication in Spain. Elma’s app offers health insurance and personalised medical services that can be accessed via chat, phone call or video conference, allowing patients to receive fast and convenient treatment at any time of the day.
- Coverfy manages all insurance from mobile devices while offering a free optimisation and improvement service. It allows users to centralise this management with any insurer from their mobile, saving time and money without worrying about paperwork or renewal dates.
- Weecover. It allows e-commerce companies to offer insurance coverage as part of the online purchasing process. This startup offers insurance for pets, vehicles, gadgets, household appliances and events. It therefore allows companies to allocate insurance offers right in the checkout process for e-commerce and transactional platforms.