InsurTech: Examining the Role of Technology in the Insurance Sector

Dr. Jeevesh Sharma, Assistant Professor, Department of Commerce,

Faculty of Management & Commerce, Manipal University Jaipur
Email: jeeveshmanipal17@gmail.com

Dr. Suhasini Verma*, Associate Professor, Department of Business Administration,

Faculty of Management & Commerce, Manipal University Jaipur
Email: suhasini.verma@jaipur.manipal.edu
*
Corresponding author

Abstract

Most industries have been disrupted by technology, and the insurance industry is no exception. Companies must address the
new dimensions brought forth by this disruption if they want to succeed and stay competitive. In this regard, the study focuses
on looking at how technology is used in the insurance industry. This analytical and descriptive research examines secondary
data to determine how technology is impacting the insurance industry, what these changes mean for established businesses,
and how these businesses might take advantage of new possibilities while keeping costs to a minimum. Our findings imply
that the use of technology is transforming the business model from reactive to proactive and offers significant potential for
effective policy monitoring from claim initiation through claim resolution. The results of our study contribute to the current
conversation about the insurance industry's digital transformation and offer the insurance sector useful information for
pursuing its goals of population health and profit maximization.
Keywords: Insurance sector, Insurtech, Artificial intelligence, Blockchain, Technology adoption, Digital insurance
platform

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 InsurTech: Examining the Role of Technology in Insurance Sector

1. Introduction
Technology has revolutionized how businesses are expanding in this era. Technology has influenced businesses
globally and has shown a dramatic shift in business models (Cortis et al., 2019). It has created a competitive
advantage with the emergence of IoT (Nayak & Bhattacharyya, 2020), Big Data (Arumugam & Bhargavi, 2019),
machine learning (Baudry & Robert, 2019); Grize et al., 2020), Artificial Intelligence (Riikkinen et al., 2018),
Blockchain (Brophy, 2019; (Tasca, 2019) etc and digitalizing the businesses (Agbo, 2019; Baecke & Bocca, 2017;
Barry & Charpentier, 2020; Brophy, 2019).
The impact of this widespread use of technology in the insurance sector is so vast that a new term “Insurtech” is
coined. InsurTech is “an insurance firm, middleman or an expert in the insurance value chain, which makes use
of technology to compete or to offer value-added advantages for the insurance sector” (Yan et al., 2018; Neale et
al., 2020; Cortis et al., 2019). This emerging phenomenon called Insurtech has the potential to re-establish
customer relationships in the insurance sector (Yan et al., 2018). Asymmetric information, adverse selection, and
moral hazard are features of the insurance market. InsurTech offers the ability to close this knowledge gap,
lowering the likelihood of moral hazards and adverse selection (Malik et al., 2022). The adoption of technology
is hastening the evolution of the Indian insurance industry. The business sector is likewise attempting to deal with
the demanding and evolving client behavior regarding goods, comfort, services, etc (Cappiello, 2020). A "one-
size-fits-all" strategy is being replaced by "bite-size insurance" and "sachet-model insurance" goods in the market
(Mokkarala, 2019). The Indian insurance industry is evolving because of the emergence of InsurTech start-ups
(Mokkarala, 2019). The old economy corporations are under competition from InsurTech firms (Saeed et al.,
2022). With the help of technology, firms are offering innovative products at a minimized cost (Fitzgerald et al.,
2014).
Globally, the investment levels throughout the industry show the progress of InsurTech. From roughly $2
billion, InsurTech financing has increased globally to $6 billion in 2020 from 2016 even if America makes up the
majority of Asia has received the largest financing share (68 % of investment in 2020), and through 2019, the
fastest-growing region (5-year CAGR of 60 percent). India has also witnessed a rise in financing, although having
a smaller base of $287 million in 2020 from a low base of $11 million in 2016. With Turtlemint raising $30
million, the trend in investment has persisted in November 2020, with Digit initially generating around $84 million
in 2021 (According to BCG1 report on InsurTech, 2021). As per a report published by inc42, with a CAGR of
31%, the Indian fintech sector is predicted to develop at one of the highest rates in the world, reaching $1.3 Tn by
2025. Lending technology is expected to make up 47% of its major sub-sectors, or $616 billion, followed by
InsurTech at 26% ($339 billion), and online payment at 16% ($208 billion) (BCG report 2021).
These changing dynamics are putting pressure on conventional firms. They need to strategize their business
model, product offerings, operations, and customer relationship management to not to left behind by new-age
insurance companies. In this direction, researchers attempt to give a thorough grasp of InsurTech in the present
environment while simultaneously offering an overview of the subject in this essay. Also, the study analyses how

1
Boston Consulting Group Report (BCG)

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Insurtech companies are utilizing technology to provide better products and services, so that conventional
companies may use this insight for their betterment and stay ahead in the competition.
The remainder of the paper is structured as follows. The second section conceptualizes the background of
the study by analyzing the technology disruption in the insurance sector, and the usage of technologies in
insurance, and presents the emergence of InsurTech in the healthcare ecosystem and in the insurance sector. The
third section presents the method adopted in the study. Section four deals with the explanation of InsurTech
business models followed by the evolution of Insurtech with penetration of internet usage and growth of InsurTech
in the market is explained in section five. Section six concludes the findings of the study and ends up by presenting
the recommendation, limitations, and future research of the study in section seven.

2. Background

2.1 Technology disruption and Insurance Sector

Due to the nature of their dealings with intangibles, financial services are particularly well-suited for digitization
to cut down on processing expenses and speed up service delivery. Such innovation has recently been fuelled by
new technical advancements, and the phenomenon is sometimes referred to as "FinTech." The insurance industry
is no exception to this, as technological advancements have opened the possibility of innovative delivery
techniques as well as expanded data collecting options, or "InsurTech," which is short for "insurance technology"
(Cappiello, 2020). InsurTech is more frequently associated with service enhancements for individuals than for
enterprises, as a contrast to FinTech. The advisor concept or the bancassurance model have typically been
employed for insurance intermediaries (Neale et al., 2020; Eling and Lehmann, 2018). Many InsurTech start-ups
are adopting this paradigm and putting forth new insurance distribution methods, even if it continues to be the
primary intermediation channel for most established insurance markets. The portions of the supply chain that have
been the most impacted by technological advancement are without a doubt those related to sales and distribution.
The use of digital technology has had a huge impact on how services are delivered, how they are used, and
ultimately how we relate to our customers.
The use of digital technologies has transformed how customers hunt for information, make decisions, and
purchase goods, as well as generated new requirements (Shree, 2018). According to Kaur (2019), consumers
believe that the Internet lowers costs, serves as a reliable source of information, aids in the process of weighing
options, and improves their ability to make decisions. Due to the phenomenon known as "digital disruption,"
InsurTech start-ups first expressed doubts of whether their novel business models would pose a threat to the
established firms (Naylor, 2016). One of the slowest industries to fully adopt technology innovation has been the
insurance sector. The now unstoppable digitization process is having a significant impact on insurance companies
and pressuring drastic shifts in corporate culture, products and services, relationship management, and relations
with the sector's various competitors (Albrecher et al., 2019).
A changing world requires insurance companies to adapt but overcoming difficult obstacles and remaining
ahead call for a fresh strategy. A dynamic prototype is provided by an integrated business accelerator for insurers
to speed up digitization, forecasting, analysis, performance management, and control for insurers (Ferrieres).
Insurance businesses may increase their efficiency through cost reduction and revised pricing strategies by cutting
down on interactions owing to the digitalization of distribution channels (Cappiello, 2020). Numerous cutting-
edge technologies may be used on both the front and back ends of processes to optimize them along the whole

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value chain. The insurance value chain is being impacted by big data, AI/cognitive computing, predictive
modelling, telematics, the Internet of Things (IoT), pricing/underwriting, sale and distribution, policy and claims
administration, asset, and risk management, and more (Rayport and Sviokla, 1995; van Rossum, 2002; Meier and
Stormer, 2009).
2.1.1 The Insurance Industry is being disrupted by technology in the following ways:
1) Underwriting Robotics
All insurance company needs underwriting, but it can be tiresome and time-consuming. Fintech businesses are
decreasing redundancies by computerizing this procedure. A customer's records, reports, and related data may be
analysed by AI algorithms to identify risks and provide quotations more rapidly than people (Arguello, 2021).
Customers won't have to cope with antiquated, ineffective underwriting procedures anymore thanks to these
alternatives, which will do away with them. Reduced human participation in this process can also aid in
eliminating prejudices, guaranteeing clients receive the most equal rates and rewards.
2) Speeding Up the Application Procedure
Earlier the fintech reform, getting consent for insurance goods may take weeks or even months. Today, it usually
only takes hours, if not minutes. The main causes of this rapid development are artificial intelligence and mobile
apps. Customers may utilize smartphone applications to submit applications from any location using
straightforward, user-friendly forms. AI algorithms may evaluate this data to determine if an applicant qualifies
for a certain policy, allowing service providers to concurrently serve a greater number of clients.
3) Expediting the Filing of Claims
Fintech solutions can accelerate the process of submitting an insurance settlement. Customers may now submit
claims using an app with several big insurers, and it often just requires a few minutes (Yan et al., 2018). These
services streamline the process for users while helping the insurer organise crucial data. Future insurance
technology platforms will be able to incorporate information from android platforms, satellite photography, and
other sources to quickly offer a full picture of the occurrence. Electronic information can also improve the
precision of insurance claims.
4) Attracting Younger Clients
By addressing the digital demands of a generation that grew up with the internet, fintech assist insurers in attracting
younger clients. Younger customers can benefit from choosing the best coverage for them rather than following
what their parents liked and providing cutting-edge services can help competitors grab their clientele. For
millennials and younger clients, convenience and remote access are significant advantages, and both are provided
by InsurTech.

2.2 InsurTech and healthcare application

One of the main areas of Insurance Technology is the use of information technology (IT) by insurance firms in
the medical and healthcare sectors (InsurTech). The insurance industry's firms that embrace innovation and the
creation of new goods and services with the aim of lowering costs for both customers and insurance firms
themselves are referred to as being in the insurtech sector. Additionally, it aims to raise customer satisfaction and
increase operational effectiveness. Its growth is being fuelled by the acceleration of digitalization, the emergence
of innovators, and applicable technologies like artificial intelligence, big data, machine learning, or the internet
of things (Okada, 2018). It is strongly tied to fintech, accounting, and finances. InsurTech is helpful because it

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allows insurance businesses to conduct sophisticated and effective business while enabling the provision of new
goods and services that were not before feasible via the use of IT. There are several programs that encourage
health improvement efforts in society at large, including insurance clients, using a mobile application and other
technology. Through the app, users may evaluate their health phases and get help for changing their habits.

2.3 Technology Adoption in the Insurance Sector

Cloud computing, telematics, the Internet of Things (IoT), mobiles, blockchain technology, artificial intelligence,
and predictive modelling are technological advances that have an impact on the insurance sector (Cappiello 2020).
As new technologies develop and become more mature, digitalization will continue to have a significant influence
on the insurance value chain (Eling and Lehmann 2018). The industry for health and health care insurance has
both potential possibilities and problems because of the usage and deployment of such technology and the related
wealth of data that it may give. This kind of technology is already being used by insurers from a variety of
industries in areas like customer interaction, promotion, and assessment (Spender et al., 2019).

Artificial
Intelligence
Machine
Telematics
Learning

Personaliza
Internet of
-tion and
Things
data

Insurtech technologies

Robotic
Chatbots Process
automation

Data
Big Data
Science
Blockchain

Figure 1: Insurance technologies

2.3.1 Blockchain and Insurance

In the era of the digital economy, blockchain technology may automate instalments to provide a safe,
decentralized method of sharing personal documents, information, and logs. Two of the most popular technologies
nowadays are blockchain and artificial intelligence. Using smart contracts, blockchain may manage connections
between members without a middleman (Hussain & AI-Turjman, 2021). The blockchain is trusted to create
several opportunities. When used effectively, such procedures can provide scientists and authorities an accuracy
of up to 90% (Hussain & AI-Turjman, 2021). One of the main issues with health insurance is security. Existing
centralized systems offer security to some level, but they are susceptible to errors or malicious assaults that cause
them to fail. Blockchain technology may be used to address this problem by creating a decentralized network

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(Kapadiya et al., 2022). Because it is a decentralized network, any parties participating in insurance can access
HIC records without the need for a single organization to manage all the insurance data. For system immutability
and transparency, data stored on the blockchain cannot be damaged, changed, or recovered (Agbo et al., 2019).
Employing encryption methods with cryptographic hash keys and timestamp protocols, it improves data security.

2.3.2 Artificial intelligence and Insurance

Artificial intelligence (AI) is a general term for use of computers to model human intelligence (Hamet &
Tremblay, 2021). AI applications have amazing efficacy across industries, especially in marketing and finance,
given the amount of general acceptance and emerging new methodologies. Based on the decisions taken yesterday,
AI may change and get better every day. It continues to learn from the vast amounts of data accessible to it (Kumar
et al., 2019). Through strengthening risk pooling and risk reduction, mitigation, and prevention, the application
of artificial intelligence in insurance has the potential to produce economic and societal advantages that transcend
beyond insurers and their clients (Riikkinen et al., 2018). The move from manual to computerized data processing
is only the beginning of the insurance sector's advanced digitalization. Insurance companies must gain the trust of
clients by appropriately utilizing new technologies to promote the use of AI systems and realize these benefits
(Stoeckli, 2018). By rethinking their conventional roles in the economy, these ecosystems provide insurance firms
the chance to not only join new income streams but also incorporate their insurance products into seamless client
experiences (Eling et al., 2018 & Lorenz et al. 2020).
Table 1: Types of artificial intelligence

Artificial limited intelligence Artificial common intelligence Artificial superior

(weak AI) (strong AI) intelligence AI

Application of AI to certain areas Application of AI to numerous Application of AI to any area

only areas

Unable to make independent The potential to independently Quick problem-solving skills

decisions about other issues resolve issues in other areas in other domains

The competence of humans in a The competence of humans in The competence of humans

certain field several areas in all areas
Source: (Kalpan and Haenlein, 2019)
Insurers must gain the trust of their clients by carefully utilizing the new technology to promote the use of
AI systems and reap the benefits. Artificial intelligence (AI) demonstrated its value in several commercial sectors
by quickly building automated, controlled settings that maximize production (Kumar et al., 2019). Additionally,
AI can assist insurers in enhancing their position in risk mitigation, prevention, and reduction. Following are the
benefits of AI in insurance:
Table 2: Advantages of AI in insurance
Extend the scope of risk pooling Reduce the cost of risk pooling Mitigate and prevent risks
 By simplifying access to By automating some operations,  yield fresh insights about the risk
individualized products (such as doing better risk assessments, and that may be used to reduce and
life insurance for those with pre- reducing moral hazard and adverse avoid dangers.
existing illnesses), insurance selection, you may provide
coverage may be extended to insurance at a lower cost.  Make early warning systems
new and previously uninsured available so that losses can be
client segments. reduced.

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  Increased risk insights will
increase the number of hazards
for which insurance coverage is
accessible (e.g. cyber risks)
Source: Keller, 2020

2.3.3 Insurance and IoT

The fourth industrial revolution in insurance in the developed world was sparked by the recent advent of big data,
IoT, and other types of InsurTech. The industry is working to make remote sensing technology more user-friendly
to increase customer acceptance. A way to increase insurance penetration may be found in emerging economies'
use of IoT (Saeed et al., 2022). IoT uses the internet to create a worldwide network of connections between billions
of people and physical items. Due to the widespread use of the internet and the Indian government's ambition to
help the country's digital reserves for the Internet of Things reach USD 15 billion by 2021 and USD 560 billion
by 2022 globally (Parnesh, 2021), this idea has drawn a lot of interest. The IoT is an intriguing topic in healthcare
systems because of the lack of accessibility to medical resources, the rise in the older population with chronic
conditions and their requirements for remote monitoring, rising medical expenditures, and the demand for
telemedicine in developing nations (Kashani et al., 2021).
A typical IoT ecosystem also includes sensors, sophisticated algorithms, communication interfaces, and
cloud interfaces. Patient monitoring, detection, and surveillance are crucial for improving the health insurance
system. Medical technology and the available instruments, however, are unable to correctly fulfil the same because
of the current state of inadequate healthcare (Kodali et al., 2015). Data is gathered through sensors from a variety
of devices. Additionally, communication and network infrastructures are provided by RFID technologies and
WSN (Wamba et al., 2013); sophisticated algorithms are employed to evaluate and process data. A web mobile
medical service to track, identify, and forecast dangerous illnesses was proposed by (Kumar et al., 2018). To
choose the medical information and identify the diabetic illness, they also recommended a classification technique
(fuzzy rule-based neural classifier). Networked gadgets will play a significant role on the Internet of Things' (IoT)
drastic transformation of the world in the years to come. By 2025, it is predicted that more than 50 billion
networked gadgets would have been held by individuals worldwide, up from 12.5 billion in 20102. Therefore,
IoT-connected insurance enhances risk comprehension by utilizing data from internet-connected gadgets. IoT
innovations can raise productivity, corporate profitability overall, and portfolio risk profiles. IoT enables insurers
to communicate with customers more effectively by introducing crucial touchpoints during delicate times like
purchases and claims.
IoT technologies are used in different medical fields, making them convenient for doctors and patients in the
current medical environment, such as -real-time monitoring, patient information management, and healthcare
management. The wireless sensing devices make it easier to check health indicators including blood glucose
levels, heart rate, blood pressure, body temperature, and respiration rate.

2.3.4 Smartphones application and Insurance

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https://www.mckinsey.com/industries/financial-services/our-insights/digital-ecosystems-for-insurers-
opportunities-through-the-internet-of-things

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Insurance businesses emphasize on the design of smartphone applications, websites, and official pages on the
major social networks to streamline transmission techniques and enhance sales operations. Additionally, they are
seeking to adopt customer relationship management and distribution techniques (Cappiello, 2021). These
advanced technology solutions include chatbots and Robo-advisors. Mobile applications are a new technology
trend that has emerged as a necessity for consumers and their way of life because of digitalization. These make it
easier to obtain consumer location and crucial data so that customized premiums can be launched quickly.
Companies may track their performance with these programs, evaluating metrics like conversion, user
engagement, compatibility, and data security. Because they will serve as the primary point of communication for
all future transactions, apps will be crucial. Smartphone application helps individuals to track and monitor their
health and transmit information about the miss happen to the well-known (Barry & Charpentier, 2020). Hence it
can be said that InsurTech technologies enable smartphone applications to monitor one’s health status.

2.3.5 Insurance and Robotic Process Automation and chat-bots

The last few years have seen a lot of interest in software robotics. Through instantly automating manual consumer
and back-office procedures, Software Robotics claims to be able to increase their speed, cost-effectiveness,
consistency, and regulatory compliance. The return on investment for all these advantages often happens in less
than a year. (Lamberton, 2107). RPA may be applied in a huge variety of corporate and industrial organizations.
RPA may be used as a platform for many business process automation. Many different industries and business
organizations may use RPA. Several business process automations may be supported by RPA as a platform (Ratia
et al., 2018). To assess the market, identify potential consumers, and ascertain their needs, insurance companies
are already using RPA. RPA will assist in fusing innovative methods, securing them against updates in the future.
RPA's high level of automation will make it possible to do reporting and analyze fraud tendencies (Oza et al.,
2020).
After the description of technologies used in the insurance sector including healthcare, the following table
summarizes each technology applied in InsurTech.

Table 3: Technology Adoption in Insurance sector

S. Technologies Description References

No.
It can be helpful for gathering data, classifying Keller, 2022; Johnson,
Artificial
1. information, improving risk assessments, and 2021; Kumar et al., 2019;
Intelligence
enhancing customer interactions. Kelley et al., 2018
Beneficial for building chatbots, finding trends, Paruchuri, 2020; Baudry &
Machine
2. detecting fraud, and categorizing large amounts of Robert, 2019; ding et al.,
Learning
data 2020; Shailaja et al., 2018
IoT solutions enable continuous data collection and Kashani et al., 2021;
sharing across networks, accelerating, and Kodali et al., 2015;
Internet of
3. optimizing the claims process, reducing data Darshan & Anandakumar,
Things
duplications, and essentially eliminating consumer 2015; Yeole & Kalbande,
annoyance. 2016
Robotic Process Automation (RPA) is a collection of Ratia et al., 2018;
Robotic Process tools that helps organizations run more quickly by Bhatnagar, 2019; Shaheen,
4.
Automation giving monotonous, repetitive, iterative jobs to bots 2021; Lamberton et al.,
2017; Kumar et al., 2021

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 and creating possibilities for effectively using
human labor.
Employ real-time data and information processing to Albrecher et al., 2019;
build a better and more efficient ecosystem with the Kenyon & Eloff, 2017;
5. Data Science aid of data science. They can create data dashboards, Wuthrich & Buser, 2021
scraping techniques, and automation scripts for you
using data science.
to maintain and share patient data with doctors, Brophy, 2019; Crawford,
diagnostic labs, pharmaceutical companies, and 2017; Raikwar et al., 2018;
6. Blockchain hospitals. Blockchain applications can precisely Popovic et al.,2020
detect serious errors, including potentially deadly
ones, in the medical industry.
Massive amounts of information produced using Berthele, 2018; Kenyon &
digital technology to gather patient records and Eloff, 2017; keller et al.,
7. Big Data
manage hospital performance are referred to as "big 2018; Hussain & Prieto,
data" in the healthcare industry. 2016
Insurance firms integrate information gathered from Barry & Charpentier,
gadgets and cell phones to determine the 2020; Xu & Dukes, 2022
requirements and preferences of their clients and
Personalization
8. design plans that are suitable for those demands. A
and Data
more positive customer experience and precise risk
evaluations are made possible by using data to target
individuals.
Telematics is a tool that auto insurance firms use to Husnjak et al., 2015;
get real-time data on the policyholder and driver. Handel et al., 2014;
Observing driver behavior, vehicle condition, and Baecke & Bocca, 2017;
mileage are a few of the frequent use cases. Usage- Eling & Kraft, 2020;
9. Telematics based insurance (UBI), pay-as-you-drive (PAYD), Constantinescu et al.,
and pay-how-you-drive (PHYD) are a few insurance 2018; Guillen et al., 2019
forms that lead to telematics. Customers and insurers
will both profit from such high levels of
personalization and intelligent data utilization.
The bots would be capable of answering consumer Riikkinen et al., 2018;
questions without the need for human interaction, Nuruzzaman & Hussain,
saving insurance firms a great deal of time and 2020; Mahajan, 2021;
10. Chatbots
money. They will also be able to explain the rules Pirila et al., 2022
and procedures. Additionally, it enables 24-hour
assistance and smooth consumer engagement.
Source: Author’s Compilation

3. Methods
The present study is analytical and descriptive in nature. To analyse the burgeoning growth of technologies in the
insurance sector, secondary data is collected from published materials like reports provided by the Indian
InsurTech Association and BCG along with prior works of literature published by various academicians and
corporates. The researchers also examined investments made by insurers in technology, investment is taken as a
proxy for growth in InsurTech.

4. InsurTech Model

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The term "InsurTech," which refers to technology created or utilized expressly for purposes related to insurance
operations, is becoming more and more common in business publications (Neale et al., 2020). Start-ups in the
InsurTech space typically utilize highly linear business models that are narrowly focused on a few key areas and
dense with cutting-edge technology. Most have excellent capabilities for processing and analysing big data and
using artificial intelligence, particularly machine learning (Cappiello, 2020). These start-ups can take advantage
of market possibilities faster than traditional businesses because of their substantial digitalization. As a result, they
frequently have an innovative culture that values it, as well as a mindset that puts them in the lead when it comes
to industry transformation (Catlin and Lorenz, 2017). Peace of mind, which is offered as the intangible service of
assurances in case of crises, is one form of value shared by all life insurance firms. Insurance and services geared
at health promotion have the power to alter traditional viewpoints.
Changing long-standing business models in the insurance sector has been gradual, but pressure on insurers
is mounting (part 1: customer journey; part 2: data-driven business models): the current business model is a phase-
out model! The report "Assekuranz 4.0" refers to these changes and advances as the "digital triangle," and they
are what is driving the insurance sector's essential technology innovation as well as showcasing its enormous
potential.3
Figure 2: Model of Insurance industry Source2

The figure presents the working operation of insurance companies in two approaches that is new and old
approaches. In the old approach, it is seen that the individual meets the agent and asks for insurance and as per
need, the insurance is provided within a two-week period. But in the new approach, the InsurTech start-ups are
assisting individuals to opt the insurance through smart analytics which includes hybrid cloud, big data, ledger
technologies, and edge computing (Berthele, 2018). New systems that learn on their own provide a wide range of
opportunities. The terms "Industrialization/Automation" may be used to differentiate between blockchain
technologies, machine learning, and robotic process automation (RPA) (Ratia et al., 2018).

5. Insurance Technology (InsurTech)

3
https://www.strimgroup.com/en/blog/business-model-insurance-3/

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Digital transformation is the use and utilisation of information and emerging technology to transform many
aspects of a company, from the creation of new business models to modifications to operational procedures and
customer support. Emerging digital technologies do present game-changing opportunities for both the public
sector and companies of all sizes. The majority of businesses are implementing different technologies as part of
the digital transformation of their operations. The insurance sector is not exceptional. InsurTech firms employ
technology as a tool to streamline their offerings and improve client satisfaction. Insurance driven by technology
is anticipated to have a big impact on millennials' lives as they search for rapid fixes in their busy lifestyles. The
InsurTech firms concentrate on streamlining the insurance industry's technological environment and enhancing
operations (Yan et al., 2018; Yeole & Kalbande, 2017). InsurTech is changing how communications, information
sharing, and the insurance business model by utilising big data, artificial intelligence/cognitive computing,
predictive models, wearable technology, telematics, and the Internet of Things (IoT) in value chain creation.
Companies have started to innovate utilising technologies like the Internet of Things, the blockchain, and artificial
intelligence to reduce the product's complexity. Three key parts of an insurance technology system: a monitoring
and feedback device, a fog analytics engine, and a cloud server. The driving analytics determine in real time the
driving scores based on current driving behaviours and road conditions using sensor-recorded data. The feedback
gadget then interacts with the drivers, offering valuable input and potential rewards (Marafie et al., 2018). Any
business or product that uses technology to add value to the insurance value chain is referred to as InsurTech (S.L.,
2018).
The main driving force is a growth in demand for business process digitization, particularly for capabilities
to simplify and automate claims processing. Additionally, the transaction has been simplified thanks to the
ongoing development of various payment processing technology, which has fuelled industry expansion.
Additionally, to modernize the value chain, insurance tech companies are garnering funding from established
players and investors globally with their innovative and distinctive solutions.
Innovation or technology in insurance start-ups, or InsurTech, has become a significant draw for investors.
Indian InsurTech garnered over $1 billion in funding between 2015 and 2020 and gave rise to the unicorn start-
ups Digit Insurance and Policy Bazaar. Several InsurTech, including Turtlemint (US$ 46 million), RenewBuy
(US$ 45 million), and Digit Insurance (US$ 18 million), received investment from midsized venture capital
companies in the first half of 2021 (as per IBEF report)4.

Figure 3: FinTech, InsurTech and Business model

4
https://www.ibef.org/blogs/opportunity-for-fintech-in-the-indian-insurance-industry

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India has a 1% insurance penetration rate in 2021, vs a 4% worldwide average. With a CAGR of 57%, InsurTech
is the fastest-growing sub-segment of fintech in terms of market opportunity. According to Inc42's most recent
fintech report, India's 300+ active InsurTech businesses generated $1.8 Billion between 2014 and the first quarter
of 20225. Insurance firms have upgraded their old systems and added virtual assistants to their digital platforms
to improve them. A virtual assistant called LIC Mitra was introduced by LIC, BIMA Bot by New India Assurance,
UNI Help by United India Insurance, and NYRA by National Insurance.
Table 4: Technology Penetration
2020 (%) 2025P (%) 2030P (%)
Internet penetration 45 63 75
Smartphone penetration 39 57 72
Payment wallets penetration 14 23 38
Online shopping penetration 14 22 36
6
Source
Therefore, with the use of technology, the Indian insurance sector has quickly advanced toward digitization, or
"InsurTech." As a result of the implementation of new technology and distribution methods, businesses may now
contact their clients both during Covid and on regular days. There are five core categories that are crucial to the
Indian insurance market, according to the research released by the Indian InsurTech Association and BCG in April
2022. New consumers entering the market, increased distribution penetration and reach, the necessity of
improving the customer experience, data and analytics, and increased focus on health insurance through National
Health Stack are some of these. The following figure 4 presents the growing trend of funding in Insurtech in terms
of amount and deal count.

5
https://inc42.com/features/how-insurtech-can-grab-maximum-share-in-trillion-dollar-indian-fintech-
opportunity/
6
https://www.ibef.org/blogs/opportunity-for-fintech-in-the-indian-insurance-industry

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 Figure 4: InsurTech Sector recorded a huge jump in funding in 2021 Source7

6. Conclusion

The world is currently experiencing an era of technological explosion, during which one technology is being
swiftly superseded by another. New technologies have a bigger impact on the insurance industry, both directly
and indirectly. The paradigm for insurance might very well alter because of these innovations. Given the
increasing use of technology in the insurance sector and the emergence of Insurtech companies and the lack of a
comprehensive analysis of how the technologies are disrupting each domain of insurance, we strive to conduct
the study to understand how new-age firms are applying the technology to provide innovative products with
increased operational efficiency and reduced cost. Our results are in conformity of (Liu et al., 2018). With the
help of technology such as big data, machine learning, artificial intelligence, and IoT, now they respond
proactively in identifying probable losses and try to prevent them or offer innovative policies like pay-per-use.
Our study revealed that these technologies are playing a very important role in policy generation, calculation of
premiums, fraud detection and prevention, and claim settlement, which helps InsurTech companies to save huge
costs.
7. Recommendation, Limitations, and Future Research
Our study suggests to conventional firms invest in these technologies to reap the above-mentioned benefits. They
may develop these technologies themselves or take the help of third-party or may join hands with the technology
firms to offer insurance products. Though the study is comprehensive in its coverage, but it lacks an understanding
of the perspective of stakeholders. For this, an empirical study may be conducted. Future research may also be
conducted to understand the behaviour of insured or their intention to purchase insurance products. These studies
will help insurer to offer better and innovative products and grow the market.

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https://inc42.com/features/how-insurtech-can-grab-maximum-share-in-trillion-dollar-indian-fintech-
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