New insurtech solutions are disrupting an insurance industry that has remained relatively unchanged for “hundreds of years” and diminishing the need for traditional services, PwC has said.
In a blog posted today, lead partner of the digital experience centre in South-East Asia and Australia at PwC, Nick Spooner, said the rise of insurtech and the emergence of start-ups in the insurance space is cutting out insurers entirely and forcing them to reassess their business models.
“For hundreds of years, the insurance industry has been inert. Its processes and products worked; it simply didn’t need to change.
“Insurtech is changing that. What we think of insurance today will soon be unrecognisable.”
Mr Spooner said the rise in personalised, usage-based and on-demand cover is an example of disruption to traditional forms of cover available to consumers.
“Insurtech is promising even more granular cover, such as with insurtech start-up TikkR, which aims to insure moments with ‘shields’ of protection. For instance, someone who frequents public transport might choose to protect themselves between work and home, with a mix of life, accident and theft insurance, which kicks in during travel hours.”
Meanwhile, digital brokers allow users to upload or import policies from different insurers and manage them on their phone, while artificial intelligence can generate advice on their entire insurance portfolio, Mr Spooner said.
“This analysis could identify double-ups in cover, gaps to be filled or suggest other products (or insurers) that might be more suitable,” he said.
Mr Spooner advised that current insurers look to blockchain which offers “transformational possibilities” when it comes to documentation management.
“The use of AI-based smart contracts – agreements, such as an insurance policy, that self-execute when certain conditions are met – combined with blockchain, could lead to a reduction in operating costs and accelerated processing time,” Mr Spooner said.
“ChainThat, for instance, has created a platform where risks can be insured without the need for physical documentation.”
Mr Spooner said that with the rise in use of digital devices that work to prevent the very thing consumers seek compensation for, the role and nature of insurance will change.
“With less risk, the nature of insurance will need to change as traditional risk models cease to apply,” he said.