Virtual i Technologies wins ACORD InsurTech Challenge
The virtual event brought together 12 insurance-based startups to present their ideas in the spirit of fostering industry development and tech enhancement. Presenting to a panel of expert judges, contestants were tasked with presenting opportunities for real change.
“ACORD InsurTech Innovation Challenge (AIIC) brings together an exciting group of innovators who share a strong desire to bring positive change to the insurance market," , ACORD's Global Managing Director.
“The AIIC was the insurance industry's first competition of its kind in 2015, and we are proud to continue this tradition of recognising and supporting the emerging technologies that will advance our industry the London market and globally."
Democratising high-quality risk management
In addition to a US$10k cash prize, Virtual i Technologies (ViT) will be given opportunities to introduce its technology to a wider audience via ACORD’s own platform.
A strong proponent of the shift from ‘faith-based’ underwriting to data-driven and dynamic decision-making, the company aims to make robust and high-quality risk management solutions available to insurers at affordable prices.
“Any one of them is capable of making a tangible impact on the insurance industry. It is of critical importance that we continue to provide opportunities for talented innovators to help shape our future; especially at this time, when it is even harder to step outside of the 'getting back to business as usual' priorities.”
Hosted in multiple cities around the world, the AIIC’s next event goes across the Atlantic from London to New York, taking place on 10 September.
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.