Insurtech: definition and technology trends in the insurance world

The pandemic emergency has made everyone keep their eyes fixed  on their own health, be more aware of human, social and economic fragility and therefore more concerned about protecting it. Insurtech has thus benefited from this push in recent months, becoming one of the most innovative and propulsive sectors. Disruption in the world of insurance was not, and is not at all taken for granted, but it seems this is the right time.

Insurtech: definition

If Fintech is what  unites Finance and Technology, insurtech was born alongside the insurance sector and is defined as the application of new technologies to the world of insurance. In this sector we can range from the underwriting of policies to the management of claims and optimize or automate all processes by digitizing them and using Big Data Analytics, Artificial Intelligence and APIs, but not only.

Very often insurtech is understood as a subset of fintech. Whether this is correct or not this is not the place to talk about it. We are more interested in the dynamics and characteristics of a phenomenon which , though it may have been a bit slow to take hold, is now increasingly known and interesting. It is not an inkling. This is stated by the numbers of the Fintech & Insurtech Observatory of the Polytechnic of Milan, which identified in 2020 as many as 392 insurtech startups globally, concentrated mainly in America and Europe followed by Asia. Our continent surpasses the Asian one only for the number of startups. If we look at the funds raised, 11 billion dollars in total, we are surpassed having stopped at 2.25: almost half of the figures of America and Asia.

Insurtech: the technological trend between Artificial Intelligence and Blockchain

The greatest contribution to innovation in the sector comes from the – very abundant – intelligent use of data through the use of Big Data Analytics and Artificial Intelligence, but APIs, programming interfaces that enable the creation of business models based on integration and collaboration in full view of open banking, are also assuming increasing importance. 

The approach to technologies such as Blockchain and Distributed Ledger is more timid, and cryptocurrencies are not yet particularly used, while there is a growing interest in sustainability, which is increasingly high on the agenda of many companies and organizations, and increasingly present in the mission of insurtech startups and in their business plans. According to the Fintech & Insurtech Observatory, this urgency is felt by 28% of the startups that are winking their eye  at least at one of the Sustainable Development Goals defined by the United Nations, giving priority to social and climate issues.

Insurtech in Italy – Observatory Data

Investigating how Italy is approaching this booming sector suggests the degree of propensity for innovation in our country, and the Observatory’s data are more comforting than one might think. A good percentage of Italian Internet users between 18 and 74 years of age have already adopted Insurtech services and the most popular ones have been digital insurance policies (27% of them), behavior-based insurance (8%) or claims management from mobile (9%). The level of satisfaction in general for now, remains high, even if the idea of relying on insurance companies remains and few still change interlocutor moving over  to Internet companies, startups and mobile operators. It’s a growing trend, however, so insurance companies know the time has come for them too, to innovate, guaranteeing speed of response, 24/7 availability and the possibility to manage every operation from a mobile.

Not only people, but also companies, are in the of insurtech and the Italian ones are rather traditionalist for now.  84% have active insurance coverage and 42% have purchased it in the traditional way, but in the future this might not be the case anymore as there is a great interest in digital channels. This turnaround has been accelerated by the pandemic which has given a strong impetus to digitilization, erasing,or at least fading, the skepticism that was a troublesome brake for the insurtech sector.