Insurance as a service

The past years have witnessed the strong traction of banking as a service which has paved the way for the Insurance industry to follow suit.  Before proceeding on with the details of insurance as a service, it is essential to understand what does the term “XYZ as a service” actually means. The idea behind “XYZ as a service” is that businesses buy services from the vendors on a subscription-based model as per their needs and usage.  When we talk about insurance- as-a-service, it implies that the companies can buy pre-built elements of the insurance industry based on a subscription basis and empower their insurance based operations.

Why is Insurance as a service model impressive?

Businesses need to understand their business cases primarily for their incumbent processes. When they have the option to test a particular service on a trial basis, then it is a great way to save money and be sure of their decision. They do not need to overhaul their core functions for integration rather a small-scale trial will be enough for them to adopt a specific model. Thus, Insurance as a service is an excellent option for incumbents, entrepreneurs, and startups.

What does it need to provide Insurance-as-a-service?

 Customer analytics:

Using advanced analytical technologies to get an insight into the psychology of the customers and accordingly create related products. Also, implement insurance chatbots for creating a transparent platform for communication. 

 Personalized data:

With the help of latest technologies related to social media and mobile gather personalized information about the customers and establish a real-time personalized relationship.

 Contextual tools:

Leveraging analytic and artificial intelligence tools to analyze the data from various resources like the social media and other online sources and anticipate the customer needs based on it. With the help of this information, a product can be formulated that match customer’s expectations and also helps to build brand loyalty. 

How are start-ups developing models for Insurance as a service?

Several start-ups have taken the initiative to develop models for Insurance as a service which can be divided into three categories:

1.Full stack: 

Startups are providing the complete infrastructure for deployment of full digital insurance. They provide single product development as well as licensed white-label backend. One interesting example is the Swiss startup Stonestep that gives micro-insurance as a service by partnering with mobile network operators, retailers and other vendors who already have an existing distribution presence. Working with partners help them to save infrastructure costs and helps them to make insurance available for even the most remote geographical locations.

2. Digitizing Process assistance:

Some start-ups are helping businesses to implement and streamline their processes in the digital environment.  They assist companies to digitize and channelize insurance operations in a single system and then connect them to their engine. Mantra Labs is a leading provider of InsurTech services and offers plug and play products for the digital insurers such as:

  InsurTech focused chat solution: It is an AI backed chatbot that works on a self-learning model and is updated from time to time based on the interactions of the agent with the customers. It is available at a fraction of cost and saves a lot on licensing and agent salaries costs.

 Paper to digital document parser: It allows the users to digitize the paper-based documentation in the digital format by extracting the essential information.

The insurers today, need to start offering situation dependent personal risk management products. Insurers can remodel their offering based on real-time scenarios which will not only urge the customer to invest in the insurance policies but also work towards improving their customer’s health and welfare. For instance, you do not have comprehensive auto insurance but how good it will be if your insurer provided theft insurance whenever your car entered a theft prone area?  It is a win-win situation for both the policyholder as well as the provider.

3. Digital core elements:

There are startups who offer their services in a specific field of insurance. Mantra Labs focuses on three major categories, i.e., customer engagement, new revenue streams, and security features. Some companies like Riskpossible help with underwriting, RightIndem for claims and other for customer data management and fraud detection. Because these companies focus on specific domains of insurance they are much more efficient in making Insurance services a winner.

The insurers today, need to start offering situation dependent personal risk management products. Insurers can remodel their offering based on real-time scenarios which will not only urge the customer to invest in the insurance policies but also work towards improving their customer’s health and welfare. For instance, you do not have comprehensive auto insurance but how good it will be if your insurer provided theft insurance whenever your car entered a theft prone area?  It is a win-win situation for both the policyholder as well as the provider.

References:

https://medium.com/insurtech-vc/insurance-as-a-service-an-introduction-bacedc975ad3

https://www.ibm.com/blogs/insights-on-business/insurance/insurance-as-a-service/

https://venturebeat.com/2016/12/15/stonestep-raises-4-million-to-provide-micro-insurance-service/

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