Insurtech: Technology in Insurance

How technology is changing how insurance is sold, priced and claimed, from app-based policies to usage-based motor insurance.

Insurtech refers to the use of technology to change how insurance works. New companies and traditional insurers are using apps, data and automation to make insurance cheaper, faster and more tailored.

Selling insurance digitally

Online platforms let people compare and buy policies in minutes, rather than through agents and paperwork. In India, aggregator websites allow comparison of health, motor and life insurance across companies.

Embedded insurance

Embedded insurance is offered at the moment of another purchase: travel insurance when booking a flight, device protection when buying a phone, or small cover when booking a train ticket. Indian Railways, for example, has offered optional low-cost travel insurance when booking tickets online.

Usage-based pricing

Usage-based insurance prices policies based on actual behaviour. In motor insurance, pay-as-you-drive policies charge according to distance driven, and pay-how-you-drive policies use data from phones or devices to reward safe driving. India’s insurance regulator allowed such add-ons from 2022.

Faster claims

Technology can speed up claims: customers upload photos of damage, and software assesses them. Some simple claims are approved within hours.

Parametric microinsurance

Insurtech has helped expand parametric insurance, which pays automatically when a measurable event occurs, such as heavy rainfall or extreme heat, without needing a claim inspection. This can make small policies affordable for farmers and informal workers.

Insurance for rarely used cars

A person drives only on weekends. Under traditional motor insurance, they pay the same premium as someone driving every day. With a pay-as-you-drive policy, they pay less because their car is on the road less, reducing their risk. Technology makes it possible to measure and price this difference.

Concerns

Privacy: tracking driving or health data raises concerns.
Fairness: highly personalised pricing may make insurance unaffordable for higher-risk people, undermining risk pooling.
Mis-selling: embedded insurance can be added without customers noticing or needing it.
Accessibility: digital claims processes must work for blind and disabled users.

Thinking more data always makes insurance fairer

More data can price risk more precisely, but insurance works by pooling risk. If pricing becomes too individual, people with higher risks, often through no fault of their own, may face unaffordable premiums.

Key takeaways

Insurtech uses technology to change how insurance is sold, priced and claimed.
Embedded insurance is offered at the point of another purchase.
Usage-based motor insurance prices by distance or driving behaviour.
Privacy, fairness in pricing and mis-selling are key concerns.