What Is Insurtech?
Insurtech is transforming the insurance industry with new technology to improve customer experience, simplify policy management, and increase competition.
Notice we said "transforming," not "disrupting." Uber disrupted the taxi industry. Insurtech (also sometimes called "insuretech" or "instech") isn't doing that for traditional insurance – rather, it's revitalizing a well-established industry to make it more vibrant, sustainable, and agile.
How Insurtech Works
The most visible examples of insurtech come from the personal insurance world:
- In-car monitoring devices.
- Wearable activity trackers.
- Customer-facing apps.
- SaaS platforms that manage insurance coverage and payment.
In these examples, we see insurance companies leverage better data and customer experience to improve their insurance coverage and make more accurate predictions about risk.
But a lot of insurtech is something most of us will never see. In the small business insurance world, for example, insurtech works behind the scenes to increase the options business owners have, keep costs low, and speed the delivery of insurance coverage.
Twenty years ago, it was hard for a new business to find insurance. They'd have to schedule a meeting with an insurance agent, and ultimately, they might find out that the agent's carrier didn’t have any coverage options to fit their business.
Now, insurtech makes it so someone can start a consulting business, go online, and find out in 20 minutes how much their policy will cost. Investors are taking notice:
- In 2011, there were just 28 funding deals involving insurtech companies. By 2016, that number had jumped more than 600 percent, to 173.
- Of the insurtech funding deals that closed in 2016, two-thirds were for seed (Series A) funding.
- 59 percent of insurtech deals that closed in 2016 were for startups based in the United States.
How Insurtech Empowers Small Businesses
Insurtech makes life easier for America's 28 million small-business owners. To understand why, it's important to know what the world of small commercial insurance used to look like:
- Lack of options: Small business insurance policies – which only cost about $500 per year – are often considered small potatoes to insurance carriers. They have the option of writing policies for larger businesses that have premiums of millions of dollars. For the work involved, many carriers just didn't see small-business policies as worthwhile. Because of that, few offered small business insurance, which meant small businesses had limited options for coverage.
- Long paper applications: Before systems like Insureon's TRUDI combined questions from multiple insurance companies' applications, business owners had to complete a full paper application for each carrier they applied to. And as we mentioned, there was a good chance that carriers wouldn't have anything for them.
- Lack of small business expertise: Even when a carrier did write some small business policies, there was a good chance they specialized in only a few industries – likely the ones that were easiest to cover. So there was no single destination where small businesses in all industries could go for risk management information and coverage options.
Insurtech changed all this. Thanks to innovative technology that Insureon and others have built to support a few great ideas, small-business owners now have access to:
- Economies of scale: Being online means we can serve businesses all over the country, which means we have enough customers to make our processes efficient. We also work with dozens of insurance carriers, which lets us connect each customer to the carrier whose policies best match their needs.
- A single online application: In 15 minutes, business owners can complete an application with Insureon and receive quotes from several top insurance providers.
- Centralized knowledge and advice: Thanks to the Internet, business owners can get access to a group of industry-specialized insurance agents no matter where they live. They're no longer dependent on whatever knowledge their local broker has about their work. Our agents specialize by industry, which means they know insurance for that type of business inside and out: which policies a business needs, which carriers offer those policies, and what a business can expect to pay.
Insurtech Is Revolutionizing Insurance from Within
As others have acknowledged, the insurance industry is complex. It’s highly regulated. Insurance companies have been slow to adopt new technologies because they have to comply with laws at the federal, state, and local levels.
When outsiders try to revolutionize insurance with technology alone, they often fail because they stumble over these regulations.
Insureon, like other successful insurtech companies, considers itself very much a part of the traditional insurance industry. Our carrier partnerships are as vital to what we do as our proprietary technology. Our compliance team is top-notch – and so are our developers. What we do wouldn't work any other way. Our nuanced approach to insurtech has yielded many exciting innovations, including…
- TRUDI: The TechInsurance Real-time User Data Interface, or TRUDI, is the engine we built to power everything we do. TRUDI pulls data from hundreds of insurance carriers to match customers' business needs to appropriate policies – in real time. Our agents use it to track customer quotes, bind coverage, manage policies, and more.
- Online application: The user-facing side of TRUDI, our application lets business owners enter their information just once for access to hundreds of carriers.
- Policy Buddy: This simple diagnostic tool lets business owners determine in just two minutes which policies they're likely to need, based on the way they've set up their business.
Have Insurtech Questions? Ask Us!
Insureon has been recognized as a pioneer in the insurtech space. If you'd like to talk to our CEO, Ted Devine, or other members of our leadership team, please contact our press representative, Kaitlin Mansour (firstname.lastname@example.org).