Fintech Insurtech

Insurtech – changing the world of risk

Insurtech – changing the world of risk. Main photo: alphaspirit,
Written by Chris Skinner

Technology is allowing some insurtech companies to change existing insurance models. Chris Skinner looks at some interesting examples.

I haven’t blogged about insurtech much, but having started life in the insurance industry I guess it’s time to shine a light on this corner of the financial world.

My first hearing about insurtech (or ‘instech’, if you prefer) was at a US conference a couple of years ago, where Progressive Insurance had reengineered its home and auto website. Most other insurers, you have to go through two or three screens of in-depth questions and form filling to get a quote. This is because the online forms are a replica of the paper forms. Progressive rethought that process and came up with the idea of entering your zip code, or if auto insurance, vehicle registration. Using publicly accessible databases, it can then immediately give you a guideline quote before you fill in any other forms. Easy-peasy, lemon squeezy.

Progressive home owner's insurance. Image courtesy of Chris Skinner

Another example was from Allianz, which was experimenting with smart home technologies, with the idea that if your doors and windows are chip-embedded to the internet, they can tell when you’ve left home and have any security vulnerabilities in real-time.

But these aren’t really insurtech examples, because they’re from incumbents. Probably my first visible insurtech startup that I spotted was Friendsurance in Germany. Now six years old, the small peer-to-peer insurer has recently secured a $15.3m funding round. The way the model works is that everyone contributes to a common pool to mitigate risk – that’s the very nature of insurance. However, in Friendsurance’s case, any premiums left over in the fund at the end of year are paid back to contributors, as the risk didn’t happen. Pretty cool, although it hasn’t been replicated in other regions yet, which implies this is a more difficult challenge than it appears. In fact, Ryan Hanley at Agency Nation believes that peer-to-peer insurers such as Friendsurance, Lemonade and InsPeer are just brokers and mutuals. Take this interview with InsPeer founders Louis de Broglie (LdB) and Emmanuelle Mury (EM) by BlueDun:

Q: At its core, insurance is all about pooling of risks. Are you simply boiling the mutual insurance company down to its essence, removing a lot of overhead, and passing the savings on to consumers?

 EM: Yes, completely.

LdB: But mutual companies are so big that you don’t feel a sense of community. The idea is to use technology to help you leverage your local community, with all its positive aspects. So it’s true that we are coming back to the original idea of the mutual company. The peer-to-peer advantage is the fact that you band together with your community, which creates more virtuous behaviour – a lower claims rate, for instance. This can only be possible if people have a sense of community.

Changing the model

So not that disruptive after all. But technology is allowing some insurtechs to change the model. Take the cool insurtech Trōv, for example. Trōv gives people the power to insure just what they want, when they want, and for just as long as they want, entirely from their mobile app. Here’s how it works:

Since then, a whole raft of startups worldwide are doing interesting things, such as these 14 companies:

  • Cocoon makes an internet-connected security device for the home.
  • Kasko provides a white-label option for instant insurance purchases on affiliate platforms.
  • BimaAfya is connecting low-income populations in Sub-Saharan Africa with health insurance.
  • Buzzmove provides price comparison for the removals trade; information that is important to insurers after a loss.
  • Myfuturenow helps connect dormant pension accounts to holders.
  • Roost makes a smart battery for smoke detectors and counts USAA among its investors.
  • Augury makes sensors for heating, ventilation and air conditioning systems.
  • CoVi Analytics is a platform for insurers to use the required reporting from Solvency II data in their enterprise in other ways.
  • Domotz is an Internet of Things management system that offers a platform for insurers to rate risk and manage claims.
  • FitSense helps life and health insurers leverage data from wearables.
  • Quantifyle allows users to “shop around” their wearable and other health data to insurance companies, and find the best price.
  • MassUp uses APIs to connect insurers to retailers, so people can quickly and easily add coverage to new purchases.
  • Rightindem is a self-service total loss claims platform that claims to reduce insurers’ workload and leakage while improving customer service.
  • Safer is designed to help millennials identify what kind of insurance they need by tapping into their social data.

Equally, we mustn’t forget firms using distributed ledgers, such as Everledger, which is guaranteeing the provenance of rare items for insurance purposes.

And what can an insurer learn from an insurtech? Well, here’s six things that Tim Kunde, co-founder and managing director of Friendsurance, believes they could note.

READ NEXT: Fintech plus insurtech = supertech

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main photo: alphaspirit,

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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