The market is changing and digital transformation is in full swing with insurtechs, the key to scaling and updating legacy insurance companies. The race to implement better technologies and innovations that will bring more products to market and provide customers with a seamless experience is one of the main reasons why global funding will grow exponentially in 2022.
#1 Embedded fuse is trending
Like the Fintech Buy Now Pay Later revolution, insurtech is undergoing a seismic change of its own. The embedded insurance space is a game changer for both customers and the insurance industry across multiple industries. Innovative companies develop products that can be purchased quickly and with just a few clicks at the time of launch of retail websites and apps. The results speak for themselves. Technology research shows that if customers can purchase insurance coverage at the point of sale, they are much more likely to invest in an insurance offer if they only need a few additional clicks to complete the transaction. Currently, most products must be insured by the customer searching for the product by searching online for the right protection. However, this can be time consuming and the insurance conversion rate is only 1-3% when a product is purchased. Compared to embedded insurance where the conversion rate is 10-20%, the decision is no longer wiser for companies that offer property and accident coverage for purchased products, car insurance and more.
#2 Auto companies will open their own insurers to rival insurers
According to a recent announcement by Elon Musk, automakers will soon compete with auto insurers by introducing their own forms of insurance. Tesla's growing insurance division recently launched its real-time driver data insurance product in Colorado, Oregon, and Virginia. Auto insurance is currently available in a total of seven states. Tesla Insurance is also available in California but lacks real-time driver safety data due to state regulations. Data supports the findings, as Tesla is currently able to provide coverage to major insurance companies at a 20-40% discount.
#3 Super apps and AI technology drive customer adoption
It is no longer acceptable for customers to fill out claims forms with pen and paper and mail them or email them to the insurer. But even though the fast cogs of technology are in overdrive, these processes are still used by many traditional established insurance companies. The customer votes with their wallet and takes their business elsewhere, to insurtechs who can provide them with UBI coverage for their car in three clicks and send them a roadside recovery vehicle and initiate the claim process through a super app using real-time reporting and use. Superapplications that can manage a wide variety of activities and are now increasingly interpreted in the fintech industry are also collaborating with insurtechs to offer their customers the option of insurance through the customer's banking app. The system is fluid and hassle-free and is proving a winner with a growing generation of young customers who have embraced the benefits of mobile technology.