Fintech Lecture 9: Insurance
Insurance is financial protection. It can be life, health, car, bike, rental or anything else.
As we are improving our lifestyle, one thing which is also improving is the quantifiability of risks in daily life. Companies can leverage that by using alternate data and give us customized insurance plans based on our lifestyle.
Every insurance company is pumping fuel for more subscribers, premiums and fewer claims to make more money.
One pain point insurance companies have is their Claim processing time. It goes both front-end and back end. Frontend is where the user is trying to claim their insurance and backend is where that insurance company is trying to validate and settle that claim.
Big tech can be very influential in this area, particularly the big AI companies like Google and Baidu. We’ll see there are some startups that are entering this field because they’re very good at data analytics and ML and to the extent that they can be data aggregators like Google.
Alibaba, Tencent and ‘Ping an’ insurance created a joint venture in china to create the biggest insurance tech startup.
I think healthcare is a really important piece of it, that many insurance companies, health-care management companies have a tremendous amount of data, and they want to make more sense of it and with that data, they want to provide more fine-tuned insurance products but also help manage our health-care system better.
There are startups who talk about how we live our lives and trying to underwrite and lower the cost to us.
There are some employers who made their employees register their wearable with a company program where if they walk certain steps they’ll be rewarded with some gift coupons. A direct benefit is employers can assure that people are healthy and well, so they won’t take many days off and indirectly that data might be shared with some health insurance company to lower the premium.
Sensors
We have sensors everywhere from hand, phone and to the fridge. Previously home security systems were tagged with security companies to be contacted by police if there is a breach. But now those are everywhere and they are collecting data that might have spiked in 2020 because of worldwide lockdown.
Most auto insurance companies are using these to keep track of insurer’s driving patterns and modify premiums. On the other hand they can validate your claim as well when you say, I had an accident. They can ask, was it really ? You can call this Telematics.
StrongArm Tech, they’re selling a product that in factories if your factory workers will wear some wearable sensor, you can lower the cost of workplace insurance. You can also, hopefully, make the workplace safer. So they’re selling a safety device, injury protection, but it’s about software and hardware because they’re selling the wearables.
All founded in the 2000s. So this is 5 or 10 years of dynamic change. You’re going to see a heavy emphasis on homeowners and autos. So it’s in the consumer space, very similar to credit. You see a little bit moving into small business but not large commercial lines
Actors in Insurance Business Model
Licensed Insurer — A broker for insurances, who is bringing deals/flow for Insurance companies. That means actually committing a balance sheet, becoming licensed, taking claims on as a liability, managing the asset side as well.
Managed General Agents — This is just a term to say you could be managing agents or brokerage or sales
Data Aggregators-- Those companies who gather and present data to technology providers.
Technology Service Providers-- They are core Insurtech/healthcare companies who are building solutions.
So what we’re seeing in insurance tech, is a whole world of sensors and collecting alternative data, whether it’s from our cars back to the telematics, whether it’s from our watches or our wearables, our Fitbits, from our smartphones, from the sensors in our homes, all that can sort of collect data, a little bit of machine learning. Lower the costs, broaden the inclusion potentially and then on the claims-management side as well, sensor technology, collecting the data, lowering the fraud and many more.
All of this for what ?
So that we can enjoy our life without having less thought about dangers of the world probably. I mean you can’t fight all dangers or problems in the world, they are there to keep you occupied but it feels good while you are fighting, you and your loved ones are safe and I think it’s nice.
Lecture 8: Trading — — Lecture 10: Corona Crisis and Conclusion
Lecture 1: Introduction — — — — — — — — — Index
