New data and AI techniques are overtaking the insurance sector
17 December 2017
The traditional insurance sector is facing a shake-up from a new wave of insurtech companies, who use artificial intelligence and data to both work out the risk profile of potential customers more accurately, and make the product selection process less painful for them.
Research by PwC shows 74 per cent of insurers predict disruption of their business over the next five years, with 43 per cent having fintech at the heart of their corporate strategies. “The area in which start-ups are disrupting the market is in digitalisation, where companies are looking to improve the customer experience,” VC investor at Axa Strategic Ventures Florian Graillot tells me.
“There has been a move from the analogue world to the digital, with companies using natural language processing technologies that help address customer needs. If you look at the insurance market, customers are paying for something but they do not understand what they are paying for. Insurtech start-ups need to address this.”
Graillot’s advice for companies wanting to start-up in the insurance sector is to help ease “pain points” by educating customers about the products and services they provide. One trend Graillot is seeing in the industry is a move from a one-size-fits-all approach to more tailored insurance products based on customer lifestyle and behaviour.
But although start-ups have been disrupting the market, Graillot does not believe a revolution in the insurance sector is at hand just yet. “Start-ups need to prove to the market they can gain traction, they can monetise their service, and that customer are ready to pay for their product or service,” he says.
“They need to find a way to work with insurance companies. At the beginning they all say, we want to disrupt the market, we don’t want to talk to insurance companies. But in the end, due to regulation, due to balance sheets and due to pricing the writ, they need to work together.”
This article was published in our Business Reporter Online: Future of Insurance.
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