In the early days of the pandemic, actuaries scrambled to assess the impact of the crisis on future risks. At the same time, customer demand was changing rapidly: in October, nearly one in three millennials said they felt an increased need for life insurance. While new categories of concerns and shifting customer behavior transformed insurance product offerings, the insurance industry was in the midst of its own transformation. COVID-19 accelerated InsurTech’s transition from backend software providers supporting insurance companies to innovative and standalone insurance brokers and carriers.
Like the banking, healthcare and retail sectors, there was a surge in demand for digital services as insurance customers looked to digital solutions to replace in-person interactions. With carriers scrambling to accelerate their digital timetables, InsurTech companies stepped in to meet growing demand for digital insurance solutions.
Promising InsurTech companies have a number of advantages over traditional insurance vendors:
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Entering the market, InsurTech startups can leap-frog legacy systems, processes and the traditional cost base found in insurance giants.
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InsurTechs leverage the power of smartphones/devices, sensors, data, APIs, and AI to identify client needs on a personalized level, while being able to develop large enough risk pools to create new products and diversify risk.
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Automated onboarding processes gather more personalised and timely data from customers making it easier to assess individual risk profiles.
2020 has seen a wave of InsurTech startups raising large amounts of capital and eyeing the public markets. Root Insurance (auto), Hippo Insurance (home) and Lemonade (home and pet) are just a few examples of new players leveraging sudden shifts in consumer behavior to disrupt the insurance market.
Looking ahead, InsurTech will look to capitalise on the abundance of newly available digital data and AI technologies to reinvent insurance markets. As our health data starts to migrate to consumer-friendly digital formats, it is likely that the next InsurTech wave will be focussed on more sophisticated insurance products and business models in the life and healthcare space. Cyber-insurance products will also be prominent in venture markets for the next decade.
As we’ve seen in other sectors, the pandemic didn’t change the expected transformation in the insurance industry. Rather, this crisis shortened the adoption curve, as new entrants turned to AI and other technologies to accelerate the pace of innovation.
AI News This Week
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Designed to Deceive: Do these people look real to you? (New York Times)
A type of AI known as generative adversarial networks (GANs), enables the creation of images of (fake) people that are virtually indistinguishable from the real thing. Trained on images of real people, these networks produce simulated images which can then be further manipulated, shifting their age or emotion. The marketing and entertainment industries are increasingly turning to GANs software, populating ad campaigns, corporate websites and video games with AI-generated imagery and video.
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Google invests $4.5 Million in Montreal AI Research (Google Canada)
Google is renewing its commitment to the Quebec Institute of Artificial Intelligence, MILA. Led by global AI pioneer Yoshua Bengio, MILA will use this additional funding to further its research into the applications of AI in the health sector, including the fight against COVID-19.
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The US Government Will Pay Doctors to Use These AI Algorithms (Wired)
The US government recently said it would pay for use of two AI systems: one that can diagnose a complication of diabetes that causes blindness, and another that alerts a specialist when a brain scan suggests a patient has suffered a stroke. The decisions are notable for more than just patients —they could help drive much wider use of AI systems in health care diagnostics.
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Why Google, Amazon, and Nvidia are all building AI notetakers for doctors (FastCompany)
Taking notes and inputting them into medical records is so cumbersome for doctors that they often use human medical scribes. For the last several years, big tech companies have been looking into the kinds of tools doctors could use. AI-powered transcription is the latest push toward automating medical processes.
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Privacy Commissioner Shares Recommendations for Regulating Artificial Intelligence (Betakit)
The Privacy Commissioner of Canada released recommendations for regulating artificial intelligence in Canada. The recommendations look at ways AI companies can respect privacy while supporting further commercialization of a technology that is central to the Canadian government’s innovation agenda.
Radical Reads is edited by Leah Morris (Senior Director, Velocity Program, Radical Ventures).