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InsurTech

InsurTech is the union of the insurance industry and technology. InsurTech has been slower to take off than other areas that have used technology to expand how they operate. However, it now appears that InsurTech companies are increasing because of the belief that the insurance industry is ready for innovation and reinvigoration. The use of new technology is not only simplifying the processes involved and improving customer experiences it is also increasing competition in the market. The nature of the insurance industry means that it is a complex area that is heavily regulated and traditionally it has been very paper-based. However, the industry is starting to embrace this new trend of becoming more efficient than the traditional insurance companies and the ability to offer customers a better experience. The use of technology is not only streamlining the whole process but also has the ability to alter the whole industry and relationship with customers. Our specialist lawyers can guide and advise businesses who are wishing to practice in this area to make sure they remain complaint with all relevant regulations.

How does InsurTech work?

Any business going into this industry has to be aware that there will be a large amount of regulatory compliance issues. Any new products will need to comply with these rules and regulations and it is imperative that companies take advice to make sure that this is the case. Insurance is a very old business and tends to favour those with a lot of experience in the industry. Insurance revolves around the use of data which traditionally has used specialised actuaries to assess risk and set prices. Traditionally actuarial tables are used to assess risk and group together categories of people to determine insurance policy levels. But this is not a personalised service and is something that today's customer is starting to expect in all aspects of their lives. The use of software will allow the whole industry to grow much further. Technology can be used very efficiently with insurance to assess the interaction between customers paying their payments and making claims. The insurance policies offered to customers can be tailored specifically to their needs and requirements in a flexible way by using technology resulting in greater customer satisfaction and efficiency.

One of the issues is that start-ups in this industry still require the help of traditional insurers to underwrite and help manage any major risks. Traditional insurers have been wary of changing their ways and of joining with InsurTech start-ups who therefore need to prove their reliability and worth to the industry as a whole. But the industry is starting to definitely move towards this new model of offering insurance.

The way that insurance is purchased using InsurTech is very different to traditional models. Customer-facing apps mean that insurance is now being offered online direct to customers without the use of a middle man at the click of a button. Ensuring that products function both correctly and accurately are essential to ensure they are meeting the needs of the particular market sector they are aiming for.

InsurTech companies need to test their technology with real data to produce results that can demonstrate the efficiency and use of the product to clients and investors as well as proving to regulators that they are compliant with relevant legislation. Making sure that they have considered the collection, evaluation and sharing of data in advance of any regulatory review will ensure swift compliance when there are any regulatory inquiries.

Where insurance companies are converting from more traditional methods to InsurTech, their staff will need to be trained to ensure they are comfortable with the new methods of delivery that are being integrated into their systems.

How can technology help the insurance industry?

Although the insurance industry does not necessarily appear to be an industry that technology would be useful, it can actually be incredibly beneficial. The use of artificial intelligence, Internet of Things (IoT) and the range of other technology advances will expand the insurance field even further. For example, health insurers can use data from wearable technology to alter premiums on their policies. Similarly, wearable technology for pets is being introduced by pet insurers for similar reasons. Other devices will help insurers to monitor and assess various risk to optimise profits. Car insurers are able to use technology to monitor the speeds of their insured drivers in order to insure them effectively. Equally in the future, the way we manage our home will be monitored in order to adapt home and content insurance premiums. Issues likely to cause a claim on household insurance will be remotely controlled to prevent disasters, for example, the ability to remotely turn off the water supply if a burst pipe is detected. The use of AI will enable insurance companies to analyse and predict outcomes with various models meaning that insurance companies can adapt their policies and improve their engagement and relationship with customers. IoT will allow insurers to connect more efficiently with customers. The time it takes for a customer to work out how much an insurance policy will cost can now be done in minutes without the need for lengthy paper forms, which will then increase customer satisfaction. It is also envisaged in the future that technology will mean that customers will be able to bring all their insurance requirements together into one all-encompassing policy making the whole process completely personal and tailored to their needs.

The amount of investment in InsurTech is increasing year on year and London is heaving involved in funding in this area. The insurance industry is perfectly placed to take advantage of technology to allow the industry to continue to grow.

Contact Selachii LLP- InsurTech Lawyers, London

At Selachii LLP we understand that while it is fundamentally important for existing InsurTech businesses and customers of those businesses are aware of the regulations that affect them, it is especially important that new InsurTech companies are aware of which regulations apply so they can remain complaint. Contact our expert lawyers if you need help or advice on the issues surrounding InsurTech on 0203 553 0100 or using our online form.

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