Insurtech on the rise: 50% of insurance customers are considering tech-led coverage
While insurance may not spring to mind when you think of innovative industries, there is a global shift towards a more technologically progressive approach. The recently released 2021 World InsurTech Report noted a surge in investments in new digitally-led insurance players which prioritise customer personalisation through the use of various technologies, aka insurtech.
But what does this investment support mean for people taking out car insurance or comparing home insurance options? Basically, the report expects growth in tech-focused insurance companies, which means customers around the world may slowly see more innovative insurance options become available.
The report was created by multinational information technology group Capgemini and based on a number of studies and recently commissioned consumer surveys. Among these, it found 50% of insurance customers would consider taking out insurance with new players taking advantage of insurtech.
What is insurtech?
Insurtech encompases any technological device or service used to make insurance premiums more accurate and (ideally) affordable for consumers. They’ve emerged over the last decade to combat the long-established system for assessing a risk, which is what insurance prices are based on.
Previously, insurance companies relied on statistical averages of various demographics to assess how likely a policyholder is to make a claim, and thus the level of ‘risk’ they present as an insurance customer. This process may lump consumers into broad risk definitions, and could leave them paying more than they necessarily should.
In the last decade, various digital devices have been introduced into the insurance world so more personalised data can be collected from customers and added to these risk equations. The goal is for premiums to reflect the actions of each customer, rather than the risks associated with the demographics they fit in.
These technologies include things like telematics in your car which track driver behaviour, smart sensors in homes that can alert owners to leaks or fires, and wearable fitness trackers for statistics relevant to health and life insurance.
If you’d like to learn more about these innovations, read Mozo’s guide to what insurtech is and everything you need to know about it.
Which insurance providers in Australia use insurtech?
Many insurance companies may be using insurtech in some way. While you won’t necessarily be asked to opt-in or out, it’s likely that by signing up with a provider you’ll be agreeing to terms and conditions related to insurtech in your policy. So, be sure to read your product disclosure statement (PDS) and make sure you’re happy with whatever terms are set out.
For more of a detailed look into what insurtech features can add to insurance, check out the policies below which utilise different insurtech features.
Huddle Comprehensive Car Insurance*
If you like managing your insurance digitally, a Hudde car insurance policy could be a good fit. All of your policy details can be managed online and simple claims, like reporting a crash or storm damage, can be lodged efficiently through the company’s portal, Zap Claims. Once a claim is accepted, this system can also organise repairs and will conveniently pass you onto a human (ready with all your information) if more details are required.
Huddle also offers a pay-per-km policy option that could see customers who drive fewer than 15,000km a year save up to 30% on yearly premiums compared to Huddle’s regular comprehensive policy. While it isn’t necessarily a technological device, this personalised cover has a similar premium-setting philosophy as insurtech options – since a driver is on the road less often, they are theoretically less likely to get in an accident and make a claim, and are therefore less of an insurance risk.
Honey Home & Contents Insurance*
- Smart home sensors, with 8% annual discount when in use
- Satellite imagery used to avoid underinsurance
Honey uses insurtech in two key ways. Firstly, policyholders are sent smart sensors which are used as a home monitoring system to alert you to potentially damaging events like water leakages, fire, changes in temperature and unusual activity (like a break-in). Since this potentially gives you an opportunity to step in and prevent property damage, Honey sees this as a reduction in the likelihood of you making a claim. That’s why they give policyholders who install and run the sensors an 8% premium discount every year.
Secondly, Honey uses satellite data to monitor for any additions to the structure of your home in an effort to reduce underinsurance. The theory is, if you make additions to your property and forget to mention it to Honey, they can spot it via satellite and get in touch to amend your policy so your property is covered to its full value. The aim is to make sure you won’t lose out at claim time if the damages cost more to repair than your insurance covers you for. Despite the tech support, you should report these changes to your insurance provider proactively for the swiftest policy adjustments.
* Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.
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