Insurers moving from ‘grudge’ to ‘nudge’

INSURERS are counting on real-time technology to help them cut back on payouts, from a system warning ships of nearby pirates to an app offering to buy sleepy drivers a coffee.

The lure of products promising to save on claims in a highly competitive market has led to a leap in investment in “insurtech” in Europe to more than $400 million (R5.3bn) in the first half of 2017, from just $50 million a year ago.

The aim is to move insurance from a “grudge” purchase to a “nudge” product, encouraging safer behaviour. While the idea is not entirely new, the technology is making it more prevalent, prompting warnings from regulators about the risk of discrimination.

Insurers say they can navigate those hazards as they explore blockchain – tamper-proof databases shared and updated across a network – “big data”, analysing reams of information for trends, as well as the artificial intelligence technology behind driverless cars, drones and voice-recognition software.

The biggest surge of insurtech investment was in Britain, where, despite the vote to leave the EU, it hit $279 million in the six months to end-June from $9 million a year earlier, analysis by Accenture of data from CB Insights showed.

In the rest of Europe, investment jumped to $134 million from $37 million and some insurers are also forming partnerships with insurtech firms.

More than half the 100plus insurers surveyed by consultants Capgemini said they wanted to partner with insurtech firms, according to its annual World Insurance Report published last week with trade body Efma. – Reuters