Insurtech vs. Traditional Insurance - Wenalyze (2024)

The InsurTech industry funding and investment are growing at a very fast path. The number of VCs specialized in this space is also increasing. In this webinar, we are addressed why this industry is receiving so much investment and what are the advantages that InsurTech companies offer when compared to traditional insurance.

Roger Ferrandis, COO at Wenalyze, delivered this webinar. In case you miss it, you can still watch it by following this link:

These are some of the points discussed in the webinar:

1. Introduction to InsurTech
2. Why are VCs investing in InsurTech (and volume of investments)
3. Biggest Global InsurTechs
4. Advantages and disadvantages of an InsurTech vs Traditional Insurance
5. Traditional Underwriting vs InsurTech Underwriting

InsurTech is the synergy between traditional insurance and technology. The term was born around 10 years ago, and, since then, it has been generated innovative insurance products.

Thanks to the new developments in deep tech with Artificial Intelligence, Blockchain, or Big Data, insurance will never be the same.

The market size of the global insurance industry is worth USD $4.9 trillion. Having these numbers in mind, it is easy to know why there is so much interest in investing in InsurTech. The market keeps growing periodically every year, and new technologies make it more appealing.

During the webinar, Roger explained the evolution of investment in the insurance market, following this chart by Astorya Venture Capitals.

Roger also presented some of the biggest InsurTech companies in the world. Among them, 4 provide health insurance services in the US. Also, most of them are younger than 10 years.

InsurTechs need a big amount of money because they need to build the structure that big insurance corporates have been building for more than 100 years, at the same time they are developing new techs for offering better results.

Some of the advantages that InsurTech brings traditional insurance are:

– Product customization: by using new analytics methods, it is possible to get to know the clients better and adapt the products in a more proper way, aligned with their needs.

– Real-time information: the information is collected when they acquire the policy, but with InsurTech, it is constantly updated. This applies to different types of insurance.

– Money and time savings: having more automated processes, they are more efficient.

– Competitivity: in the market space, if they offer remarkable benefits compared with other traditional insurance companies in the market, they become more appealing to the clients.

– Sustainability: by digitizing processes, InsurTech makes insurance more sustainable.

However, InsurTech has a couple of cons to consider as well:

– Licenses and regulations: insurance companies know how to deal with that, but new InsurTech might find some problems when entering the market and get approved. The legislation is different in the different regions. However, for traditional insurance, it is also hard to launch a new product.

– Data privacy: whist big insurance corporates know the market and have been inside for years, InsurTechs have to take into account regulations such as GDPR and be sure that they always respect the data privacy of the insurance clients.

As underwriting is one of the most important processes for insurance, Roger explained how InsurTech benefits it. On the first hand, as traditional underwriting is usually processed manually, it can take up to 20 minutes. Also, the data underwriters rely on is usually outdated or inaccurate.

Thanks to InsurTech, it is possible to reduce processes up to only 2 seconds. By automating the processes, it is also possible to gather clients’ data in real-time. This way, underwriting decisions are taken based on accurate data.