Original Story Published by: Peter Scheffel for IT News Africa
Technological innovations have taken multiple industries by storm over the last few decades. However, insurance has often been pegged as a slightly more traditional industry. Enter insurtech. A portmanteau of “insurance” and “technology” inspired by the term fintech, emerging technologies are increasingly underpinning insurtech solutions.
Traditionally, insurers created categories of risk profiles based on variables such as your age, where you live and previous incidentals. Your insurance premium would then be an industry average based on similar individuals in the same broad category. But the use of emerging technologies is improving risk profiling, pricing and general efficiency in the insurance industry.
Peter Scheffel, CTO at software development group BBD, uses Friendsurance as a great example of a disruptor in the insurance industry. Initially a German insurtech company that has expanded into Australia, Friendsurance created a peer-to-peer insurance model which connects groups of customers to create their own risk pool to settle small claims.
“If their connections remain claims-free during the year, they can retrieve as much as 40 per cent of their premiums,” Scheffel explains.
Through insurtech, South African insurers have a more accurate representation of their clients, ensuring ultra-customised policies according to observed behaviour. Scheffel adds that “BBD is enabling top South African insurance companies to leverage insurtech through developing innovative solutions.” Below are a few examples of innovative technology being introduced throughout the different sectors in the insurance industry:
1) Car insurance
Multiple vehicle insurers are incorporating apps which use GPS and smartphone sensor technology to track your driving. These apps can track when you are speeding, taking corners too hard or even just slamming on the brakes too aggressively. But responsible drivers will be rewarded. BBD executive, Matthew Barnard idolises his insurance app, but admits that his wife’s insurance premium is much lower than his, because evidently she is the better driver.
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