InsurTech - Opportunities and Legal Challenges for the Insurance Industry
Revue Trimestrielle de Droit Financier, 2020
33 Pages Posted: 22 Oct 2020
Date Written: September 4, 2020
InsurTech did not come overnight. Insurance companies from the beginning were experts in collecting and analyzing data to assess risks and to calculate exposures and premium payments. InsurTech is the result of two new developments, however.
First, more data has become available. It is said that the volume of available data in recent years has doubled every two or three years. Perhaps even more importantly, the available data now has various different sources. While in the past insurance companies had to rely mostly on the answers they received in response to specific questionnaires and on statistical data, the technical developments in recent years have allowed much broader sources of data. Social media and other third parties are now providing data independent from the customers. Wikipedia and other open-source data allow a much more efficient gathering of information. Finally, customers are providing data through their own devices, be it at home, in the car, by mobile phone, etc.
Second, analyzing this data has become much more efficient. Big Data analytics – collecting, storing and analyzing Big Data volumes from internal and external sources – is key. The volume of data as such is not decisive, rather the ability to analyse and draw conclusions. New technologies such as the use of algorithms and artificial intelligence provide efficient tools for this.
In particular, the second mentioned aspect creates disruption. Incumbent insurers are confronted with the fact that either they need to invest in acquiring the respective technical capabilities or they need to liaise with third-party providers. In addition, they are faced with new competition by new companies targeting specific markets. While many of the new providers are focusing on certain aspects of the insurance value chain, there are also new full-fledged insurance companies.
Keywords: InsurTech, Big Data, AI, Blockchain, Insurance, Privacy, GDPR
JEL Classification: K
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