The Current Landscape for Insurtech in Mexico and the WorldBy Héctor González | Tue, 10/05/2021 - 12:57
The world of insurance is changing and, like any industry, it is also facing the need to evolve. In the last decade, companies known as insurtech have gained great relevance, becoming the best allies of traditional insurers in the world. The term insurtech refers to the commitment to innovation and the application of new automation technologies in the insurance business.
Small and large companies are joining this trend and investing in technology to digitize their systems and optimize processes. The main quality of insurtech companies is that they apply technology to offer several innovative solutions: automation of records, automated sale of policies, risk analysis and document filtering.
In this article, we share how they work, what benefits insurtech provides to companies and customers and finally, we show you how they are applied to the marine insurance sector.
How Does an Insurtech Work?
The main characteristics of an insurtech are the following:
Today you can contract and manage insurance, acquire information and share it between devices. Insurtechs can more easily contact their customers and offer them personalized products.
*Insurtech and big data
Big data refers to all the data that companies collect thanks to computerized processes, whose objective within the insurtech is to find patterns of behavior to better understand its consumers.
*Use of AI
Artificial intelligence is used in different processes within the insurance sector. These include customer service with chatbots, online claims management or instant risk underwriting.
*The technology-driven insurance industry
The birth of the insurtech happened years ago. However, as in all industries, the pandemic and the ensuing digital acceleration marked a before and after, in which users do not want to return to waiting endlessly in offices for paperwork and paper signatures.
In 2020, insurtechs raised a total of US$7.5 billion globally, 21 percent more than in 2019 and a record high, despite the health crisis.
Property and casualty insurance received the most funding, with US$3.4 billion, accounting for 45 percent of the total in 2020. Health insurance received 29 percent, multiline insurance 22 percent, and life insurance 4 percent.
In 2020, the insurtech world grew 35 percent, led by property and casualty insurance and followed by multi-line insurance. With these figures, it is clear that technology contributes to this growth and increasingly prevents us from going back to traditional methods and manuals of recruitment or management.
Currently, there are around 244 Insurtech startups operating in Latin America. According to the consulting firm Digital Insurance Latam, Mexico has the second-highest number of startups, with approximately 70 entities, behind only Brazil. Therefore, there is a great appetite among investors for this market sector.
Insurtech Impact on the Value Chain
The impact is comprehensive, from the marketing strategy and the qualification of leads, sale and contracting of products, to the prevention and management of claims, the issuance and administration of policies and the technology for underwriting risks.
*Benefits for insurance companies
Insurtechs seek innovation in customer experience and also focus on other insurance processes, for example:
· Cost reduction and automation in customer training.
· The possibility of expanding business globally.
· Improvement in security controls and fraud detection.
Insurtech and Marine Insurance
Among the advances that the maritime insurance industry has made in the decade from 2010 to 2020, technological implementations predominate.
In practice, insurance technology has gradually become involved in all lines of business, from individual lines, such as life and medical expenses, to non-casualty lines, with automobile insurance standing out, and marine insurance is no exception.
The advantages of applying technology in marine insurance are diverse. Among them is the agility in the processes, the automation and the easy registration of data to make the information available to each client without the need for human intervention to issue a cargo insurance certificate.
An example of innovation is the online platform "MySafeLink," with which any person or company that needs to transport goods by sea, air or land, either locally or internationally, can directly issue, receive and pay their own insurance policy in just five minutes. The same happens when the insured presents a claim, since the notification is uploaded to the same digital platform in just three minutes. In addition, the process is entirely online, providing the insured with visibility, the steps to follow and response times.
Systems are also being implemented in the market that measure in real time both the loss ratio and the exposure and accumulation of risk, and even estimates of average severity, among other important analysis variables for insurance companies.
The impact these technologies and business models are generating in the insurance sector is incalculable. Some resistance in such a conservative sector is to be expected; however, the consumer market will continue to drive this insurance revolution because the user is tired of following complicated and tortuous procedures, as well as slow and complex hires. History, however, has taught us that any industry that does not listen to the needs of its customers is destined to disappear over time.