By McKenzie M. Slaughter
Founder and CEO, Prohaus Group
and Telly V. Onu
Impact Ecosystem Innovator and Managing Partner, Prohaus Group
The insurance industry has remained the same since its inception and has significantly lagged behind banks in adopting financial innovations. Recently, new players have offered new ways to underprice risk, creating new types of premiums and servicing consumers in a tightly regulated on-demand economy. This chapter will expose the reader to the impact of these new technologies on reorganizing specific points in the value chain and in unlocking new innovative business models, which will ultimately benefit both customer and the insurance industry, and will serve as a mechanism to internationalize and decentralize the resulting InsurTech innovations.
Over the years, incumbent insurers have been able to implement incremental improvements around online customer servicing. New entrants are demonstrating that this approach is no longer sufficient.
As it relates to risk and underwriting, insurance firms compete with each other, in part based on their ability to replace that uncertainty with (in aggregate) remarkably accurate estimates outcomes. Years of fine-tuning these estimates have resulted in actuarial tables that mirror aggregate insured behaviour and conditions. The standard insurance underwriting techniques are still quite costly and time consuming due to ...