Insurance Agents Have Success with InsurTech, When Will Carriers Start Using It?
What is InsurTech and Why Carriers Should Use It
By: Maurice Draine
Although investments in InsurTech startups have gained over two billion dollars over the years, there are still many professionals in the insurance industry who are unaware of its potential.
While there are some who want to embrace the benefits InsurTech offers, others are unsure about how these changes will affect the world of insurance as we know it.
What is InsurTech?
InsurTech is a term used to describe the various types of new technology used in the insurance industry. This can include smartphone apps that allow policyowners to file a claim, or GPS tracking of cars that can record driving data. The term is a combination of the words “technology” and “insurance.” It was inspired by the similar term “fintech,” used to describe financial technology.
Why Do Some in the Insurance Industry Have an Issue with InsurTech?
InsurTech is considered dangerous for the insurance industry by some professionals because they feel it will cause their agency to lose money. InsurTech explores the areas of auto insurance that many larger agencies will venture into. This includes offering customized policies, and using Wi-Fi enabled devices to change premium prices based on the client’s driving behavior.
It’s important to understand that the insurance industry has been around for generations. It is one of the oldest financial industries and typically favors those who have years of experience in the market. For many years, individuals who wished to take out a new insurance policy were placed in relevant risk categories based on their age or driving record.
This allows the insurance provider to adjust so the policies are always profitable for the insurance company. This results in some policyholders paying more than they should for their coverage, because their premium is based on the group they are categorized in.
New InsurTech developments such as GPS tracking devices allow policyholders to have more control over their premiums. The price is based on a case-by-case method instead of grouping similar drivers into several categories.
This helps many policyholders pay less for their car insurance. But these savings the customers would get can put a financial dent in the profits of the insurance providers.
How Insurance Carriers Can Benefit from InsurTech
Carriers have feared how InsurTech will affect their profits since the technology was initially introduced. Fortunately, this innovative technology has proven to be a valuable resource for insurance carriers instead of a hindrance.
It all comes down to allowing everyone involved in the industry and all policyholders to have something that was never offered before, and that is a choice. As more current and potential policyholders demand faster, accurate quotes, the need for more InsurTech in the industry will continue to grow.
If you would like to update your blog with insurance related content, please Contact Us.