Insurtech

Digital Transformation Potential in Insurtech

The Insurance sector is amongst the most susceptible to digital transformation-enabled change of all industries. At the core of insurance is the concept of risk-transfer (from an insured party to an insurance carrier), and the availability of more high-quality information about a risk, and enhanced analysis of that information, can result in more accurate pricing and a more efficient market overall. Concepts such as IoT allow insurance offerings to be extended to support new propositions (such as insurance for servitised assets) and enhance services in already-established markets (with, for instance, usage-based insurance and new types of parametric insurance). Artificial Intelligence can play a significant role both in automating processes (for instance claims processing), and also in terms of assessing risks at a level of granularity that might not have been feasible before.

Nine key domains of change in Insurtech

Overall, we have identified nine key domains of change in the Insurtech sector that are enabled by digital transformation, as illustrated below.

These domains of change are discussed in more detail in our report Digital Transformation in the Insurance Sector:

The domains of change discussed in the report comprise:

Claims Automation considers the digital transformation of claims processing using a range of technologies.
Associated Services considers the augmentation of a core insurance offering with associated services such as connected monitoring devices or monitoring services, potentially in association with a channel partner.
Parametric Insurance addresses an emerging type of insurance that offers pre-defined pay-outs based on trigger events, rather than the more traditional approach which is to compensate for actual losses.
Usage-Based (Automotive) Insurance tracks driving behaviour via telematics devices installed in the insured vehicle and potentially rewards users with a subsidised premium, based on their driving behaviour.
Improved Front Office Operations which has been a focus of the insurance industry for many years and has now evolved to use AI (and RPA) to improve operations.
Improved Analytics including the analysis of better information and improved analyses applied to available information.
Servitised Asset Insurance covers a range of opportunities related to servitised assets, including policies covering repairs for those assets, and also insurance for consequential losses in the case that servitised assets malfunction.
Supply Chain Insurance considers opportunities related to insurance services for ‘connected’ supply chains and also related risk-management services.
Smart Contracts exist to ease the contracting process between an entity requiring insurance and an insurance carrier.

Collectively, the activities listed above will bring significant changes to the Insurtech sector.

IoT and Insurtech

IoT is one of the key technology groups impacting the Insurtech sector and further detail and analysis of key IoT applications for the Insurtech sector can be found in Transforma Insight’s Forecast Insight Reports. Some of these applications are directly relevant to the sector, whilst others are only indirectly related.

Directly related IoT applications and Forecast Insight Reports include:

eCall – Emergency notification from a vehicle in the event of an accident. This application can be supported using the connection provided by the vehicle head unit, or a dedicated device in the vehicle. Includes emergency calling under regulatory mandates such as ERA-GLONASS and eCall in addition to manufacturer provided services.
Stolen Vehicle Recovery – Vehicle tracking to warn of break-ins, prevent theft or facilitate vehicle recovery in the event of theft. In more sophisticated systems it may be possible to sound alarms or shut down vehicle functions. This application includes aftermarket devices placed in the vehicle in addition to software making use of the vehicle head unit’s connections.
Dash Cams – Aftermarket in-vehicle cameras used to record the interior or exterior of the vehicle, often to provide evidence in the event of a road accident.
Usage-Based Insurance – This Application Group covers onboard devices, or software hosted on a Vehicle Head Unit, used to monitor vehicle usage and driver behaviour to provide a more accurate or reduced insurance premium. In some cases, drivers are provided with instruction through smartphone-based apps to improve their driving. Instances where an application is hosted on a Vehicle Head Unit do not count as a separate connection. However, these instances are counted within the revenue-generating unit (RGU) forecasts.

Indirectly related IoT applications and Forecast Insight Reports include:

Roadside Assistance – Application that notifies recovery services in the event of a vehicle breakdown. Diagnostics and location tracking may be included to improve efficiency. This application includes dedicated devices in addition to applications hosted on the vehicle head unit.
Vehicle Diagnostics – Transmission of vehicle diagnostics data to determine faults and monitor vehicle health as well as informing drivers of scheduled servicing or repair requirements. This application includes vehicle head unit hosted software, with no discrete connected device, in addition to aftermarket OBD-II devices installed by owners.
Vehicle Rental, Leasing & Sharing Management – Onboard devices and vehicle head unit hosted applications that are used to provide access, monitor and track the usage of vehicles lent to third parties. This may include traditional car hire companies, shared vehicle programs, and finance companies that lease vehicles to their users.
Loss Prevention – Includes anti-theft solutions based on boundary control in retail contexts, and also goods location monitoring for specific goods in a retail context.
Personal Assistance Robots – This Application Group covers fully autonomous machines which undertake a diverse set of use cases including security monitoring, maintenance, human interaction, companionship and the performance of other tasks. This includes robotic pets, cleaning robots (e.g. Roomba), lawn mowers, exoskeletons, cooking robots, room and table delivery, and concierge services.
Autonomous Road Freight Vehicles – The vehicles included in this Application Group are used for transporting goods on the road in a commercial setting. To be counted as part of this Application Group vehicles must be capable of operating at Level 3 of the SAE levels of autonomy. This level of automation requires the vehicle to monitor the environment and requires “the driving mode-specific performance by an automated driving system of all aspects of the dynamic driving task. In this Application Group the number of autonomous vehicles is represented by RGUs only, the vehicles’ connections will be found in the Vehicle Head Unit Application Group.
Worker Safety – Personal monitoring and support solutions for fire service, police, and emergency medical service personnel. Also includes lone worker safety in multiple vertical industrial contexts, particularly those involving dangerous environments such as logging and mining.
Asset Monitoring – This application group encompasses a variety of assets that are suitable for remote monitoring. This includes the monitoring of livestock and associated applications such as automated feeders. It also covers the monitoring of fitness equipment located in gyms and other shared contexts. Tracking and monitoring of equipment in ambulances is also incorporated as part of the healthcare vertical. Furthermore, this Application Group includes connected video gaming machines, gambling machines and other devices such as pachinko machines. Monitoring the condition, availability, and use of assets important to public health such as life rings and defibrillators is also present in this application group, including access to potentially dangerous infrastructure such as substations.
Assisted Living – Assisted Living solutions include people tracking devices for the elderly and infirm, and comprehensive, connected medicine dispensers, assisted living solutions for patients that need significant day-to-day support or monitoring. Within the niche of assisted living, connected medicine dispensers play a crucial role and are used to promote patient adherence to prescriptions.
Child & Pet Tracking – Dedicated devices for tracking children, including anti-abandonment devices used to prevent children being left in cars. This Application Group does not include mobile phones, or any assisted living devices used by children. Tracking devices for pets, mostly cats and dogs but also potentially other household pets. Both kinds of tracker typically include GPS location capabilities and mobile connectivity, although some may use network triangulation based location to extend battery life.
Autonomous Road Passenger Vehicles – Automated Road Passenger Vehicles contains autonomous vehicles primarily used to transport passengers on the road, this Application Group includes buses, coaches, minivans, as well as private vehicles. To be counted as part of this Application Group vehicles must be capable of operating at Level 3 of the SAE levels of autonomy. This level of automation requires the vehicle to monitor the environment and requires “the driving mode-specific performance by an automated driving system of all aspects of the dynamic driving task.” In this Application Group the number of autonomous vehicles is represented by RGUs only, the vehicles’ connections will be found in the Vehicle Head Unit Application Group.
Unmanned Aquatic & Aerial Vehicles (Drones) – This Application Group consists of two main categories. Unmanned Aerial Vehicles comprises fixed wing and propellor powered unmanned aerial vehicles (UAVs) for military, government consumer or commercial use. Unmanned Aquatic Vehicles comprise small underwater and surface vehicles, typically for military use or exploration. Neither vehicle is designed to carry humans; automation of vehicles that carry humans (e.g. full sized planes or ships in automation mode) is covered under autonomous vehicles.