When it comes to innovation, the insurance industry has arguably earned a reputation for being technology laggards. While the world watched the FinTech revolution unfold, the insurance companies were nowhere to be seen. This is however all starting to change, and rapidly, with 2015 recording InsurTech startup funding at more than $2.5 billion and an estimate of more than 500 Insurtech companies in existence today.
Analytics are being taken to a new level in determining everything from consumer risk behaviour to streamlining claims processes. We are seeing the internet-of-things moving on from the hype and into reality with early stage innovations such as toothbrush sensors linked to smartphone apps that are able to determine dental premiums. Business model innovation is also exploding, with the emergence of peer-to-peer insurance models, bundled offerings and ‘as-a-service’ or ‘on-demand’ coverage models starting to take off.
At the centre of this innovation tornado is mobile technology, which has become the conduit for and through which solutions such as microinsurance are delivered and consumed, particularly in emerging markets. This is giving rise to the opportunity for a different mix of providers to reach the consumer, namely the mobile operators, who can realise benefits from reduced churn, increased ARPU and new revenue streams. Smartphone penetration could indeed further disrupt the dynamic of both providers and insurance products.
Microinsurance is by its very nature innovative when assessed against the market it serves, and mobile microinsurance builds on this by addressing the challenges which previously prevented solutions from reaching the low-income consumer for which they were designed to protect. Fundamentally creating customer value and relevance, we believe, is the key to any successful innovation. So whilst it can be easy to get carried away with the ‘cool factor’ associated with drone technology, machine learning or wearable devices, success is not guaranteed unless it is addressing an existing gap in the market and delivering real value.
Read more opinions by Inclusivity Solutions on the topics of InsurTech, FinTech and the value of microinsurance:
- CFO Magazine – 5 things you should know about the future of insurance, by Jody Delichte
- Microinsurance Network – Microinsurance is InsurTech and there is more to come, by Jody Delichte
- Next Billion – An Underused Solution to the Risks of Poverty: Quantifying the value of microinsurance for emerging consumers, by Nigel Bowman