4 Things to Know About Insurtech Companies
Insurtech companies are the newest solution for drivers seeking an innovative alternative to traditional insurance.
Traditional insurance carriers have a significant hold over the multi-billion-dollar insurance industry. But insurtech companies, described by the National Association of Insurance Commissioners (NAIC) as those using "technology-enabled innovations in insurance," are setting out to design more customer-friendly shopping experiences for car owners, while also potentially cutting down on auto coverage costs.
As an alternative and supplement to traditional coverage options, insurtech companies are hoping to disrupt an established industry and change how drivers shop for and use auto insurance. There are several reasons insurtech companies could be viable modern alternatives to traditional auto insurance companies.
Insurtech Is the New Way Insurance Is Doing Business
Insurtech companies use data to create a hyper-personalized experience for their clients. Using the data customers allow them to access, insurtech companies can simplify the digital insurance shopping experience for car owners. Insurtech companies are working to create personalized insurance engines, which use data to streamline the online insurance shopping experience so customers can quickly align with the policy that best suits their needs. This digital approach is designed to improve the customer experience while also cutting down on operational costs.
These reduced operating costs do not guarantee a lower price for consumers, however, it may provide an opportunity for these companies to pass the savings on to drivers. Lower overhead costs can also help keep their pricing competitive, which is why many of the least expensive rates are currently offered by smaller companies rather than large providers.
Insurance Carriers Are Investing in Insurtech Companies
The role of technology in the insurance industry is growing, leading many traditional carriers to choose the innovation presented by digital competitors.
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Insurtechs Are Now Offering Their Own Insurance
For those interested in exploring alternatives to the traditional insurance experience, insurtech could offer fresh options. Insurtech companies must acquire a license to sell insurance just as traditional carriers do. This means there are more provider choices than just the major carriers who currently own more than 52% of the property and casualty insurance market, according to the NAIC.
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Some companies are focused on single types of insurance. For example, Root Insurance says it is attempting to simplify auto insurance by providing a straightforward experience. Some of these insurtech companies are not available in every state, but others are making waves nationwide.
Car Manufacturers Are Also Disrupting the Insurance Industry
Small startups aren't the only ones breaking into the insurance industry. Auto manufacturers such as General Motors, Ford, Porsche, and Tesla are now offering insurance made specifically for their vehicles. Car owners can now get insurance directly from the manufacturer that understands the ins and outs of their vehicle.