Investments in Fintech Insurance have risen 300% according to a report.
Fintech Insurance, also termed as InsurTech, is receiving increased attention from both investors and consumers. Investors are recognizing an innovate, profitable business model and consumers are seeking new ways to save money on their insurance bills. Fintech Global reported a 300% increase in InsurTech funding from 2014 to 2017 – and it has shown no signs of slowing down into 2019.Entrepreneurs are also taking advantage of the rising investments in Fintech Insurance, brainstorming new ideas and unique ways of offering insurance. The majority of InsurTech companies are not licensed insurance companies themselves due to capital and regulatory requirements. Rather, Fintech insurance startups are forming partnerships with established licensed insurance firms.
How is InsurTech changing the insurance industry?
Consumer Targeting – Machine Learning and Artificial Intelligence have allowed companies to target potential customers with more precision and better acquisition rates. InsurTech companies are utilizing this marketing technology to attract new customers that traditional insurance companies missed. For example, when you go to buy a car, you usually search for the car on the internet to find the best price. By targeting consumers who are searching for cars, InsurTech companies have a comparative advantage that smaller traditional insurance companies are not using. A small insurance firm would rather pay the InsurTech for leads rather than spend a hundred thousand dollars producing their own system.Better Underwriting Decisions – Fintech Insurance companies are using Machine Learning and Artificial Intelligence to make better underwriting decisions. Artificial Intelligence can compile information based on past data to make more accurate risk assessment ratings. As a result, low-risk customers pay lower premiums and licensed insurance companies pay fewer claims.Short-Term Insurance – The ride-sharing revolution has prompted the idea of short-term insurance wear customers can insure a vehicle, bike or other short-term use items for a short duration of time. For example, if you rent a boat for the afternoon, you can purchase a 24-hour insurance plan on your phone.The Internet of Things (IoT) is also having a major impact on the insurance industry. Sensors in cars and smartphones make it easier for insurance companies to settle claims. As more opportunities emerge, we will see more InsurTech startups developing revolutionary ideas.
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