Last week I said that InsurTech firms will disrupt traditional insurance business models and overtake their rivals in the long term.
I want to discuss how InsurTech is transforming the industry by making it more efficient, customer-friendly and innovative.
First, it improves efficiency by automating underwriting and redefining risk assessment through advanced analytics and machine learning, resulting in faster and more accurate risk assessments.
Predictive analytics help insurers anticipate customer needs and market trends, allowing for proactive service and customer experience-driven product development.
ZA Insure, a digital-only service here, uses InsurTech to eliminate the need for paperwork and face-to-face interactions.
It leverages automated systems for policy issuance and claims processing with enhanced efficiency and reduced overheads. Customers can complete the entire process online, from application to claims.
AI-powered solutions can further streamline the claims process, reduce delays and increase accuracy. This includes using image recognition to assess damages remotely, speeding up settlements.
For example, US firm Lemonade uses methods similar to ZA's as well as AI.
Its bot, "Jim," set a remarkable record by processing and paying out a claim in just three seconds, significantly reducing the time and cost associated with traditional insurance processes and showing the power of artificial intelligence.
Second, it is a better journey for customers through digital platforms and apps.
InsurTech provides user-friendly apps and online platforms that allow customers to manage policies, purchase insurance and file claims easily.
As Hong Kong's first virtual insurance company, Bowtie offers a seamless online platform for purchasing and managing health insurance. Customers can easily compare plans, get quotes and file claims through its website and app.
Innovative technologies, the third feature of InsurTech companies, are being used for better risk assessment, fraud detection and personalized insurance products.
For example, telematics and Internet of Things technologies enable insurers to collect real-time data, improve risk assessment and create usage-based insurance models such as using a smartwatch to monitor how fit you are or using a telematics black box to surveil your driving behavior.
Tesla offers embedded insurance that adjusts premiums based on real-time driving behavior.
This model leverages telematics to provide personalized premiums, promotes safer driving habits and offers more accurate pricing, rewarding safer drivers and making riskier ones pay more.
Blockchain and AI technologies are the main drivers of InsurTech innovations.
OneDegree, a Hong Kong-based InsurTech company in pet insurance, uses blockchain technology to enhance transparency and security in transactions, reducing fraud and improving trust.
Its platform ensures that all transactions are securely recorded, reducing fraud and improving trust with customers.
AI algorithms can analyze images and videos submitted with claims to detect signs of fraud, such as through identifying patterns and anomalies.
For example, if claims are filed with manipulated photos, unusual frequency or inconsistencies, AI can flag them for further investigation.
InsurTech is not just about technology, it is driving efficiency, enhancing customer experiences, and fostering innovation.
An inaugural InsurTech forum to explore the latest innovations transforming the industry, including AI, cybersecurity and data analytics will be held at the ninth annual Hong Kong FinTech Week on October 28 and 29 in the AsiaWorld Expo.
Dr Jolly Wong is a policy fellow at the Centre for Science and Policy,
University of Cambridge
ZA Insure, above, and Bowtie, bottom, are two
InsurTech companies changing the industry.
