The rise of insurtech: a new dawn for the insurance industry

Insurance CIO Outlook | Wednesday, September 01, 2021

With innovation driven by technology, these 3 startups are transforming the insurance market, adding value by increasing efficiency.  

FREMONT, CA: Technology has modernized the way insurers work. Insurtech startups focus on increased personalization and greater speed and efficiency of services to meet the ever-changing customer needs. Insurtech is transforming the way consumers get coverage while increasing efficiency and affordability. Here are some insurtech startups that are enhancing the insurance industry with their innovation.  

• Next Insurance                       

Next Insurance is an online insurance firm for entrepreneurs and small businesses. The company aims to support entrepreneurs by letting them know that they have got great coverage. With that knowledge, Next Insurance empowers businesses to make big plans, take on new responsibilities, and build their opportunities. It provides tailored policies according to organizational needs. The company offers small business owners insurance plans that are simple and affordable. There is no interference of agents, and the purchase can be made 24/7. Next Insurance uses AI-based technology to eliminate agents and other expensive extras and give customers prices that are incredibly affordable. The company has raised $250 million in funding.

• Metromile

Metromile is an insurtech pioneer that uses data science and machine learning. The startup has designed a device capturing mileage data to determine how much a person can pay for their car insurance policy. The free plug-in device turns conventional cars into smart cars. The device works with Metromile's smartphone app (Metronome), which diagnoses the health of the vehicle, keeps track of its location, and offers tips to help the user with their daily commute. With technology at its heart, Metromile is reimagining insurance to make it more balanced and delightful.

• Root Insurance

Root Insurance offers liability coverage for bodily injury & property damages, non-liability coverages for collisions as well as comprehensive coverages & medical payments. It has raised a funding of $350 million at a $3.65 billion valuation. The company's main contribution is the smartphone-based telematics system, which is used to gauge driving behavior and offer discounts to safer drivers. Root is a car insurance firm founded on the idea that people who drive well are less likely to meet into accidents. Therefore, such a driver can pay less for insurance. With that in mind, Root is set to reinvent a fragmented industry that was still assigning rates based initially on demographics and had a traditional agent structure. Using technology in smartphones to measure driving habits like the speed of turns, brakes, driving circumstances, and route regularity, Root determines who is a better driver and who isn't.

Though conventional insurance companies will remain the leading runners due to regulations and capital required for an insurance license, partnerships with insurtech startups will allow them to explore newer business models. Insurtech companies manage many niche segments of the market, ranging from operating as distributors or aggregators, online-first insurance providers, API developers, medtech, and IoT, amongst others.   

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