6 Technological Advancements Empowering Insurance Startups

By Insurance CIO Outlook | Monday, August 24, 2020

Insurance Startups are embracing tech innovations to address a range of issues impacting the insurance industry.    

FREMONT, CA:  Technological innovations are transforming industries across the verticals. Insurance is one of the many industries experiencing transformations. Further, advances in disruptive technologies will impact the insurance companies that are seeking to innovate as well. An extensive study on 14,000 startups revealed potential areas where insurance startups can benefit immensely from tech innovations in the future.

• Connected Cars 

As connected cars increasingly proliferate the automobile market space, insurers can use an individual’s driving data to understand and assess the potential vulnerabilities and risks of accident. The startups can come up with innovative insurance policy offers based on the data gained from the IoT devices connected to the individual’s car.

A Swedish startup company has developed a SaaS solution that covers various driving aspects such as driver identification, geo-fencing technology, and real-time tracking to improve safety. The company also sends notifications to the drivers that are aimed to decrease their premium, such as in the event of driving above the speed limit.

• Connected Home 

IoT devices offer immense value in case of a connected home. Smart sensors assimilate information on a wide array of subjects within the home, such as temperature, lighting, water, and overall energy consumption. 

Since such homes have little to no chance of burglary, insurance companies are willing to offer insurance discounts to those that have a pre-installed alarm system. A France-based startup offers a comprehensive insurance policy to smart homes.

• Wearables

With a rise of wearables, people are becoming health conscious. Health insurance companies are offering lower premiums to people with a healthy lifestyle such as regular exercise which can be tracked from the wearable gadgets. Thus, incentivized in such a way, individuals will be motivated to maintain a healthy lifestyle while offsetting the chances for the insurance companies to pay the claim money. A Spanish startup offers a customized digital solution with benefits those with a healthy lifestyle.

• Data-driven Customer Acquisition

Each person generates massive amounts of data via emails, social networks, and feedback that offers an insight into their preferences. Startup companies are analyzing such unstructured data to enhance their efficiency by targeting marketing companies that will enable them to acquire relevant customer data and ultimately, the customer.

• Customer Retention with Big Data Analytics

Algorithms can spot early signs of customers’ dissatisfaction based on customer activities. Insurance startups can enhance their services based on such data insights and focus on solving client’s issues, offer new plans, and even change the pricing model for them. Big data will be the key technology to identify the primary reason for customer dissatisfaction.

• Predictive Models for Fraud Prevention and Detection

It’s challenging for insurance startups when it comes to fraud detection and prevention. The new players lack enough experience required to handle such issues. Moreover, the customers are also hesitant to invest their money in new insurance firms. However, startups can partner with other insurance firms who can outsource predictive models that will offer an insight into individual customer behavior. Such a setup will offer an increased sense of security to the insurance startups.

Thus, insurance startups have immense potential in the future. Incorporating relevant technologies that can address current as well as impending challenges will be the right choice. When the common issues that impact the insurance sector are considered, incorporating technology can certainly provide an equivalent platform to the startups, thereby allowing them to compete with established insurance firms.

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