Start-ups working in the financial industry have been on a steady increase since at least 2010, and now with the heightened focus on insurtechs, we are seeing more of these ambitious companies developing technology that helps underwriters manage risk. As John Cusano notes in his blog post, “Insurtech Firms Star at New York’s Fintech Innovation Lab”, the rise of insurtechs is being embraced throughout the industry, with top-tier firms actively integrating many of the innovative solutions.
“Insurtechs are aiming to help insurance companies perform better rather than trying to muscle in on their traditional markets,” says Cusano, discussing how the innovative start-ups are facilitating growth in the industry.
The commonality behind most insurtechs is that they use data at the core of their operations. Information gleaned from sensors the multitude of devices on the Internet of Things, aggregated public records or even behavior patterns of industrial workers can all contribute to a more agile, effective insurer. Information is the lifeblood of underwriting and insurtechs are helping keep the industry healthy and happy.
With the diversity of companies working to develop digital underwriting solutions, it can be hard to identify those that will ultimately have the biggest impact. The following list focuses on seven insurtechs providing intelligent and creative solutions:
- Friendsurance – Marketed as a social insurance solution, Friendsurance groups together individuals who have the same coverage.. The groups are incentivized using cashback rewards: the fewer and smaller the claims that are made, the greater the rewards. As claims are made, the cashback rewards diminish, encouraging the group to only make claims when absolutely necessary. This minimizes false claims and helps underwriters manage risk.
- TrueMotion – An insurtech that uses smartphones’ sensor technology to score drivers based on their behavior, significantly around distracted driving. The information helps underwriters attract and retain the safest, most profitable drivers.
- Habit Analytics – Data sourced from smartphones and connected devices at home is used to create behavioral patterns that help insurers make decisions regarding services, products and risk models. Leveraging real-time data allows for enhanced underwriting models and optimized pricing decisions.
- Goji – Positioned as a platform that uses personal history to help purchasers connect with the best insurer available at the best cost, Goji delivers that data to a group of major underwriters. By including driving history as a part of the application, insurers are able to provide quick quotes on the individual based on a score. This minimizes risk for the underwriter by allowing for accurate, selective pricing.
- StrongArm Tech – Focused on improving the wellbeing of industrial workers, this insurtech helps underwriters better manage risk by using data collected from sensors worn by workers. The statistical connections between behaviors, injuries and claims allow for more accurate pricing and the development and implementation of preventative solutions for injury.
- Guevara – Similar to Friendsurance, Guevara operates on a cashback platform, putting consumers into groups that are incentivized to be honest and accurate when they claim. As more claims come through, so the cash reward diminishes. This supports underwriters by reducing the number of false claims and allowing for targeted policy pricing.
- Open Data Nation – Using aggregated information sourced from around 2.5 billion public records in the U.S., Open Data Nation is able to provide insurers with insights that help them assess risk. Insurers can prioritize and select the customers they wish to underwrite, while avoiding higher-risk options.
As digital technology continues to become more nuanced and precise, the number of insurtechs is likely to grow. Insurers that do well in the new digital landscape will be those that adopt the creative solutions being developed by some of these innovative companies. As shown in the short list above, there are plenty of contenders developing creative digital offerings and helping drive the future forward.