With businesses hit by the COVID-19 pandemic, insurance has become critical for startups and small and medium-sized enterprises (SMEs). Group health or employee insurance and commercial insurance are two critical components for any business. SME, startups, or large businesses are critical for any country’s GDP growth and providing employment, contributing to taxes. Therefore, any impact on these entities can affect the entire economy.
Businesses, startups, and SMEs are accepting new technologies today and many insurtech startups are providing tailor-made or on-demand insurance to their clients. This tech-enabled successful partnership is further ensuring sustainable growth and increased revenue for insurance companies. Insurtechs play the intermediaries between customers and insurance companies. They assess as well as analyse the risks associated with a particular business and provide personalized information on that basis. For instance, insurtechs can consider government data, financial data, seismic data, fire data etc. for choosing the best commercial insurance for companies.
Developments in technology have led to new possibilities in thes insurance sector, with greater opportunities for data collection that can lead to better risk identification and mitigation measures. New age technologies like Artificial Intelligence (AI), Mobile Technology, Big Data, Blockchainand Cloud Computing have transformed the insurance sector. Insurance operating models are on the verge of fundamental change with tech-driven insurers thriving in the market space.
How Insurtech works
Generally, insurtech streamlines and enhances backend processes, improves customer experience, and saves the insurance company money. Chatbots and smartphone apps are examples of how insurtech streamlines the backend process. So, insurance companies no longer need to hire customer service employees to respond to every customer’s concern. Chatbotscan automatically respond to such queries day and night. This not only simplifies customer service experience but also saves the company money.
Insurtechs are technology-driven companies that facilitate streamlining the operations of the insurance industry in an efficient manner, thereby reducing costs. Insurtechs leverage on the benefits that technology offers, thereby helping insurers in several ways, be it by unlocking the potential of analytics or making the processes cost-effective by reducing manual intervention.
How insurtech can help insurance companies provide better employee health or group health policies
Group insurance health plans provide coverage to a group of company employees or members of an organization. Group health members usually receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders. To provide a sense of security amid the pandemic, many companies are providing group health policies for their employees. In case of employee injury, workers’ compensation insurance can pay for medical bills and partial missed wages when employees are hurt at work.
The whole process can be simplified by insurtechcompanies by analysing the personal data of employees, using technologies like Artificial Intelligence and API (Application Programming Interface) platforms. Insurance technology not only makes this process easy for employees but also for employer by better fraud and risk detection, settling claims, etc.
How technology can help in choosing right personalized insurance for businesses, startups, or SMEs
Around 75% of businesses are underinsured, and 40% of small business owners have no insurance at all. When faced with a disaster or lawsuit, many small businesses don’t have insurance to cover their costs. Insurance technology has also led to better service methods of fraud detection and is proving a beneficial tool for startups and Small and medium-sized enterprises (SMEs). Insurtechtouches upon the avenues that have opened for the industry in terms of new products and innovative ways of doing business.
Insurtech startups or insurtechs are now present across the value chain in the insurance industry—from selling of a policy to claims settlement. The thriving partnership between large insurers and insurtechs have paved the way for a more personalized distribution, predictive underwriting, and better claims management.
Insurtechs have an entirely different approach than traditional insurance companies and by partnering with insurance startups, insurers can offer enriched connectivity. For instance, AI solutions can eliminate friction at several touch points in the customer journey. Apart from that, many insurtechs are now using API. Through a programmatically consumable service or API, they can bring together two or more distinct, but interdependent groups, creating a foundation for automated interactions between them.
According to a report by India Brand Equity Foundation (IBEF), the insurance industry of India has 57 insurance companies 24 are in the life insurance business, while 34 are non-life insurers. In India, the overall market size of the insurance sector is expected to USD 280 billion in 2020, as per the report. India is the second-largest insurance technology market in Asia-Pacific, accounting for 35% of the US$ 3.66 billion insurtech-focused venture investments made in the country, according to S&P Global Market Intelligence data.
Views expressed in this article are the personal opinion of Layak Singh, Founder & CEO, Artivatic.