Friday 23 November 2018
There’s no doubt about it, technology permeates through almost every aspect of our lives. Think about your morning routine alone. For many that involves waking up to an alarm, checking the news and weather, and perhaps even boiling a smart kettle for that first cup of coffee - all with the help of a smartphone.
The point is that technology is not only everywhere, it shapes our behaviour and will, in all likelihood, continue to do so in the future. And the same thing is true of insurance. Emerging insurance technology, otherwise known as Insurtech, is already reshaping parts of the insurance industry, just as Fintech (financial technology) is pushing the boundaries of the financial and banking sector.
At its heart, Insurtech aims to provide better value, more flexible and more personalised insurance policies, and it’s already delivering! It’s also about data - namely your data. Whether that’s through technology in your car, in your home or even attached to your very person, insurers are using data to provide more accurate and personalised policies.
But just how will Insurtech change insurance for everyday Australians? From car, home and contents, health and life insurance, here are some of the most exciting Insurtech innovations and emerging policies that you’ll want to know about.
The technology: Telematics
While it hasn’t quite taken off in Australia, telematics technology is already being integrated into cars around the world. But wait a moment, just what is telematics? Well, we actually have an entire guide on telematics for you to check out, but really simply, telematics just describes technology that allows long distance communication.
For example, as part of the eCall initiative all new cars sold in the European Union now need to be fitted with an emergency assistance device which automatically sends an alert to emergency agencies in the event of a serious crash and provides them with airbag deployment and impact sensor information. The hope is these devices will reduce the time it takes for emergency services to reach serious road accidents, especially in more rural areas.
Similar telematics technology, known as black box insurance, is already changing the way car insurance premiums are calculated. Black box technology is a growing trend in the United Kingdom, with black boxes able to record driving behaviour such as speed, mileage, braking and steering. This data is then used to create a driver profile which gives insurers the ability to offer individually-priced policies depending on how safe you are as a driver!
The policy: Usage-based Insurance
While black box insurance hasn’t hit the mainstream in Australia just yet, a number of Australian car insurance providers are offering individual, usage-based policies for drivers.
Both Real Insurance and Woolworths have policies which give car owners who aren’t regular drivers the option to only be charged based on the number of kilometers they expect to drive each year - potentially slashing their existing premium. In fact, both Woolworths and Real Insurance picked up 2018 Mozo Experts Choice Awards for their respective car insurance plans.
The technology: Smart homes
By now you’ve probably heard about the rise of the ‘smart home’ - homes with everything from smart alarms, motions sensors, thermostats and even leak detectors which can be accessed and controlled with a smartphone.
Sounds smart for sure, but how can this smart tech help in a practical sense? Well imagine you’ve left for work for the day, but out the blue (an unbeknownst to you) a pipe under your kitchen sink bursts! Normally you’d come home to a soggy mess, but with a smart leak detector you’ll get an alert sent to your phone as soon as it’s detected a leak so you can spring into action and limit the damage.
Aside from giving homeowners greater control when it comes to protecting their homes, smart home technology is also likely to be popular with home insurance providers. After all, anything that reduces the risk of damage from burglary, fire, flood or any other incidents to your home or valuables is going to be warmly received by insurers, because fewer incidents mean fewer payouts. In exchange, homeowners who are willing to deck their homes out with smart technology can expect better value premiums. In fact, it’s already happening, with UK-based insurer Neos utilising smart home technology as part of their insurance offers.
The policy: On-demand insurance
Creating cheaper policies for tech-savvy homeowners in one thing, but Insurtechs are also making making home and contents insurance more flexible and convenient. Take Insurtech Trov, which has made on-demand insurance a reality.
Instead of offering a standard contents insurance policy which covers a range of items for a fixed period of time (generally a year), Trov allows people to insure single items like phones, laptops and even headphones with on-demand insurance. Basically this means you can turn protection on and off anytime you want using the Trov app, plus you’ll only pay for the time you actually use. So you could turn insurance on to protect your phone during the day while you’re commuting and at work, but turn it off at night while you’re phone’s safe at home!
The technology: Wearables
Apple watch, Fitbit, Garmin. The list goes on, but smartwatches and wearable fitness trackers are now a common sight on many Australian wrists, providing users with stats on everything from their heart rates to the steps they take each day - not to mention an alternative way to pay. But what exactly does that little bit of wrist tech have to do with insurance?
Like many other parts of Insurtech, it’s all about the data. Your data. Smartwatches and other wearable fitness trackers are able to give health and life insurance providers a near-constant picture of parts of your health without the need for you to set foot inside a doctors office. This could then translate to customers with healthier behaviour and better overall health being rewarded with better value premiums.
And insurers are already jumping on board, with some South Africa, the United Kingdom and the United States actively encouraging their customers to meet daily fitness goals and share their data in exchange for a range of incentives.
The policy: Active member discounts
The good news for active Australians is that a small number of insurers are also offering incentives of their own for more active members. Many Australians may already be taking advantage of health-based incentives such as discounts or rebates on their gym memberships, but some insurers are even offering perks for users who track their activities.
Qantas, for one, is offering its health insurance members the chance to earn Qantas Points through its Wellbeing App for activities like cycling, running, swimming and even walking the dog. Meanwhile, insurer MLC will give life insurance customers a 5% discount on their annual premium every year when they meet a weekly target of 37,500 steps.
Want to explore more resources on everything insurance? Check out our range of guides over at Mozo’s insurance hub, or keep up to date with the latest innovations and technology in the world of finance at Mozo’s dedicated fintech hub.