InsurTech in business model of Insurance Industry

 

what is business model?

A business model explains how a company creates, delivers, and captures value in various contexts, including social, cultural, and economic ones. Business strategy includes the development and change of business models, which is often referred to as business model innovation.

InsurTech in business model of Insurance Industry

 1. Products

Smart gadgets, sensors, and the internet of things (IoT) are utilised to create innovative products that save customers money and reduce underwriters' risks. Mobile technology enables P2P and PAYG solutions. These products provide millennials the insurance they desire.Telematics, location based sensors, weable sensors used in car, industry, and health insurance. Reduced preium amount are oared I policyholder share more data by this devise or sensors and both can control the risks or loss on someextent.     

 PAYG and microinsurance solutions encompass tenants' insurance, computers, mobile phones, athletic and musical equipment through mobile platform. The mobile phone applications that sell these goods let the user to upload and see the insurance values of different objects, provide various insurance pricing and protection models, and switch the insurance on or off at any moment.

 These are millennial-targeted items. The concept implies this generation of clients may want to rent rather than own assets, may only deem a risk worth covering for a particular duration or purpose (for example, a weekend away), and typically wants rapid mobile phone access.

 Typically, the claims procedure for these products will be (almost) totally automated. Customers will be able to file a simple claim via their mobile phone in minutes using an automated "chat-bot" process, with the claims monies remitted practically quickly directly to their bank account.

 2. Distribution

P2P digital platforms attempt to lower insurance costs by spreading requirements across a self-selected group of users. The group, not the insurer, picks its members, therefore pooled risk groups frequently include family members or friends, or both, allowing the cohort to co-manage its own money and claims via interpersonal influence.

The conventional insurance distribution structure has evolved over centuries to be agency-driven and broker-insurer for most lines.

Technology is disintermediating insurers and consumers, taking away "the middle man" and establishing a more direct contact. This has helped the market design and price items to meet client needs. New automated, self-directed distribution systems are being introduced. Digital distribution methods are expanding beyond price comparison websites to include the sharing economy, P2P features, AI, robo-advice, machine learning, and RPA (RPA). These features provide buyers more discretion over what things they may buy and on what conditions, frequently through mobile phone.

3. Underwriting

 Technological innovation allows primary insurers to source insurance and underwrite directly with clients, reducing reliance on middlemen; a "disintermediating" impact.

 AI may be used throughout the insurance value chain, especially in distribution and claims administration, where time-consuming operations are widespread.

 A UK start-up has designed an artificial insurance bot to replace human insurance salespeople. Its WhatsApp-like mobile messaging app utilises a robo-adviser to ask basic questions about a policyholder's insurance requirements before suggesting a package.

 AI might automate the sourcing, construction, and monitoring of life insurance portfolios and policies. AI might reduce the need for attorneys and accountants in complicated life insurance arrangements, saving policyholders money.

InsurTech-led underwriting emphasises risk avoidance above risk protection.

 The classic underwriting approach uses policyholder replies to proposal forms, historical claims data, and risk studies to anticipate consumer behaviour and claim loss trends.

InsurTech intends to change underwriting methods by using IoT connection and Big Data. The bulk of IoT-based smart devices are meant to lower the risk of claims (or the amount) on policies by passively managing consumer behaviour or minimising losses.

The underwriting process increasingly uses enormous volumes of data from IoT devices and social media to analyse and anticipate customer behaviour. This helps insurers analyse risk, price policies, decrease losses, and estimate reserves.

The classic underwriting approach uses policyholder replies to proposal forms, historical claims data, and risk studies to anticipate consumer behaviour and claim loss trends.

InsurTech intends to change underwriting methods by using IoT connection and Big Data. The bulk of IoT-based smart devices are meant to lower the risk of claims (or the amount) on policies by passively managing consumer behaviour or minimising losses.

 

The underwriting process increasingly uses enormous volumes of data from IoT devices and social media to analyse and anticipate customer behaviour. This helps insurers analyse risk, price policies, decrease losses, and estimate reserves.

Big Data and data analytics are utilised to influence more accurate and segmented underwriting choices, including pricing and risk assessment. This allows certain start-up insurers to provide coverage to people on better terms than without this data, and in other situations, who would not have been able to acquire coverage without it.

 

4. Administration and claims

Blockchain and distributed ledger technologies (DLT) are at the proof-of-concept stage (often with smart contracts) and have potential applications in data sharing, KYC, AML and fraud prevention, claims processing, and general insurance record keeping. AI devices like fraud software automate and improve claims procedures.

 Interest in blockchain technology has surged in financial services over the last year, but it's still experimental in insurance. InsurTech businesses and established insurers are using distributed ledgers, blockchains, and smart contracts in underwriting and claims, a significant departure from conventional insurance contractual and administration structures.

 Blockchain is the Bitcoin technology. Blockchain is a database that records transactions in "blocks." Each block includes a hash that references the preceding block in the "chain." If any block's contents is subsequently updated, all blockchain participants will instantly know because that block's hash (and that of any following block) will no longer match the later block's record of that hash. With an indelible record, no central authority or third party is needed.

 Blockchain systems are known as “distributed ledgers” since they work on a distributed basis. The record or ledger of all transactions is reproduced in full on each participant's computer. They are very transparent, since each participant has a full, traceable record of every transaction recorded on the blockchain.

 Automated claims payment procedures backed by smart contract and blockchain technology might result in policyholders being paid more rapidly and minimise claims administration expenses, the risk of fraudulent claims and administrative costs for the insurer. There is also the possibility for policy alterations to be automated.

 As well as lowering claims administration congestion, blockchains might improve general insurance record keeping by allowing an automated “bordereau” reporting system, with accessible and continually verified policy and claims data available throughout the policy lifespan.

 Simultaneously recording policyholder and claims details in verified blockchains could also reduce the risk of fraudulent claims, and mitigate the risk of an insurer being unwittingly used as a means to launder money, both at the back end in terms of claims payments, but also at the front end by establishing robust KYC protocols