Insurtech is a rapidly growing space, currently comprising 61 active companies compared to 26 in 2015. Although the sector is at an early-stage, it is already demonstrating strong traction, having raised $400M over 37 deals between 2016-2018, of which $300M was in Lemonade and Next Insurance. Early on, global insurance corporates realized the potential of this industry, with Munich Re, AXA, Sompo Insurance and AmTrust all having a presence in Israel, as well as investing and partnering with Israeli Insurtech startups. In the Start-Up Nation Central Insurtech Landscape Map, we show how the Insurtech sector splits into six main subsectors.
Customer Acquisition & Engagement
This area of Insurtech includes technologies that help insurance companies and agents engage with their clients (individuals or companies) or acquire new ones, while adhering to legal standards and regulations. Enabling insurance companies to offer a suitable onboarding process and more personalized policies, these also reduce advertising costs by identifying and attracting good-behavior clients precisely at that stage where they require insurance. One example of this is Aktibo, which applies NLP, computer vision and big-data analytics on open data sources to enable a deeper understanding of prospective customers to drive efficient acquisition and a personalized experience. Another is Leo, developers of a smart virtual assistant that automatically handles customer service needs.
Consumer Optimization Tools
This subsector offers tools that help consumers to manage their policies and investment accounts, and reduce fees. These are largely comparison aggregators, some of which function as a marketplace (such as Insuranks), while others act as advisory platforms, applying a personalized robo-advising function to help consumers choose the best suitable product for them. Hibob for example, provides software functions that provide employees with personalized data about their pension and benefit plans integrated into human resources management software, helping them to choose a low-cost insurance policy within 15 minutes without using the services of an insurance agent.
Advanced underwriting comprises technologies that enhance underwriting with new sets of data and risk modeling, and is also transforming the way insurers collect, access and analyze data. Advanced underwriting solutions also offer insurers further access to data previous unavailable, which enables them to more accurately assess risk, and make policies more personalized. For example, Driveway’s telematics solution constantly monitors the way we drive, enabling insurers to better understand what constitutes a “good driver,” and subsequently offer them better premiums. Advanced underwriting solutions also allow insurers to improve risk modeling for existing products, such as cyber insurance, and to better manage their portfolio risk. For example Kovrr, which provides insurers with cyber risk scenario frequencies, and levels of severity that can either affect businesses within an insurers portfolio, or companies they wish to insure.
This comprises a new line of product or modern product development, and are a combination of product development and distribution solutions. These companies underwrite the clients by themselves, directly distributing policies to the end-clients. These solutions are sometimes marketed as standalone, but are also often sold as “white-label” products, to be used by insurance companies as integrated applications. More than any other, these solutions represent the revolutionary nature of Insurtech.
Claims Management & Fraud
This is a significant subsector of Insurtech due to the application of artificial intelligence (AI). The technologies in this subsector help insurers improve claim processes and reduce claims fraud. AI technologies make information systems more adaptive to humans, and improve the interaction between humans and computer systems. This offers insurers an advantage on how they manage claims—faster, better, and with fewer errors, whether it be by enabling a real-time question-and-answer service for first notice of loss, pre-assessing claims, automated damage evaluation, automated claims fraud detection using enriched data analytics, predicting claim volume patterns, or augmenting loss analysis.
Back-Office & Analytics
These comprise B2B solutions for insurance companies that help them with their operations and bank office assignments, with technologies that vary from insurance software and analytics, to compliance and digital.
Risk Reduction Technologies
These allow insurers to alert customers of potential loss before it occurs. Using IoT devices and sensors for new source of data sets, as well as using AI and predictive analytics to process this data, risk reduction technologies monitor activities, instruct users how to be careful and warn them before damage happens. Furthermore, once users are aware of the risk and can better control it, they can even hope for a lower premium from insurers. These technologies are relevant for the full spectrum of insurance products (health insurance as well as crop insurance) and for any kind of clients (individuals as well as businesses).