What is Insurtech and what do I need to know about it?

Family sitting at kitchen table, with smart home technology for insurance.

Technology is everywhere, shaping our behaviour now and most likely moreso into the future. Increasingly, it's permeating the world of insurance.

Emerging insurance technology, otherwise known as insurtech, is already reshaping parts of the insurance industry, just as fintech (financial technology) is pushing the boundaries of the financial and banking sector.

At its heart, insurtech aims to provide better value, more flexible and more personalised insurance policies. And it’s all about data. Whether it's through technology in your car, in your home or even attached to your very person, insurance providers are using data to provide more accurate and personalised policies with premiums to match. 

But just how will insurtech change insurance for everyday Australians? From car, home and contents, health and life insurance, here are some of the most exciting insurtech innovations and emerging policies that you’ll want to know about.   

Car Insurance

The technology: Telematics

While this isn't as prominent in Australia as other countries, telematics technology is being integrated into cars around the world. You can check out Mozo's dedicated guide to telematics, but put simply, this technology allows long distance communication.

For example, as part of the eCall initiative all new cars sold in the European Union now need to be fitted with an emergency assistance device. This automatically sends an alert to emergency agencies in the event of a serious crash and provides them with airbag deployment and impact sensor information. The hope is these devices will reduce the time it takes for emergency services to reach serious road accidents, especially in more rural areas.

Similar telematics technology, known as black box insurance, is already changing the way car insurance premiums are calculated. Black box technology is a growing trend in the United Kingdom, with black boxes able to record driving behaviour such as speed, mileage, braking and steering among a host of other variables. This data is then used to create a driver profile which gives insurance companies the ability to offer individually-priced policies depending on how safe you are as a driver.

The policy: Usage-based Insurance

While black box insurance hasn’t hit the mainstream in Australia just yet, a number of Australian car insurance providers are now offering individual, usage-based (or pay-as-you-drive) policies for drivers.

HuddleReal Insurance, and Woolworths are among the insurance providers with policies offering discounts to people who aren’t regular drivers. Usually, customers will elect or agree to drive under a set annual kilometer limit and potentially be rewarded with a lower premium since driving less poses a lower risk of getting in an accident and making an insurance claim.

Home and Contents Insurance

The technology: Smart homes

By now you’ve probably heard about the rise of the ‘smart home’. Modern dwellings can have everything hooked up to a digital system, from smart alarms to motions sensors, thermostats and even leak detectors accessible and controllable with a smartphone.    

But how can this impact your insurance? Imagine you’ve left for work for the day, but out the blue a pipe under your kitchen sink bursts. Normally you’d come home to a soggy mess, but with a smart leak detector you’ll get an alert sent to your phone as soon as it’s detected a leak so you can spring into action and limit the damage.  

Aside from giving homeowners greater control when it comes to protecting their homes, smart home technology is also likely to be popular with home insurance providers. Anything that reduces the risk of damage from burglary to fire, flood or any other incidents to your home or valuables is going to be warmly received, because fewer incidents mean fewer payouts.

The policy: Home sensors and satellite technology

In exchange for reducing risk in the home ands thus the likelihood of making an insurance claims, homeowners who are willing to deck their homes out with smart technology can expect better value premiums.

In Australia, Honey home insurance is leading this shift with their smart home sensors which come with an annual discount so long as you keep them active. The sensors alert you to water leakages, fire, changes in temperature and unusual activity like someone breaking into the property. You get a notification via a linked smartphone app, and can leap into action by calling police and emergency services if necessary, then get straight onto organising repairs with Honey.

Additionally, Honey is using satellite tech to combat underinsurance. They do this by monitoring images of your property for home improvements like a pool or extension, then get in contact to ensure your home is covered for its full value so you're not left with extra bills should you make a claim.

Health and Life Insurance

The technology: Wearables

Apple watch, Fitbit, Garmin – the list goes on, but smartwatches and wearable fitness trackers are now a common sight on many Australian wrists. These devices provide users with stats on everything from their heart rates to the steps they take each day, and can operate as an alternative way to pay via eftpos. 

But what exactly does that little bit of wrist tech have to do with insurance?

Like many other parts of insurtech, it’s all about the data. Smartwatches and other wearable fitness trackers are able to give health and life insurance providers a near-constant picture of parts of your health without the need for you to set foot inside a doctor's office. In an ideal world, this can translate to customers with healthier behaviour and better overall health being rewarded with better value premiums.  

And insurance companies are already jumping on board, with some in South Africa, the United Kingdom and the United States actively encouraging their customers to meet daily fitness goals and share their data in exchange for a range of incentives.

The policy: Active member discounts

The good news for active Australians is that a small number of insurance providers are offering incentives for more active members who track their activities.

Qantas is offering health insurance members the chance to earn Qantas Points through its Wellbeing App for activities like walking, cycling, running, swimming and even getting a proper night's sleep. Meanwhile, superannuation and insurance company MLC will give life insurance customers a discount on their first annual premium when they meet a weekly steps target monitored through the MLC On Track program and your fitness tracker.

Want to explore learn more about developments in the  insurance industry and how they could affect you? Check out the guides at Mozo’s insurance hub, or keep up to date with the latest innovations and technology in the world of finance at our dedicated fintech hub.