Page 8 - Turkinsurance Digital Magazine

6 cover story

According to the report, as traditional retail customers adopted We have seen the samples of this business model in taxis and
to online channels 10-15 years ago, traditional bank and insur- tourism; which has deeply impacted the functioning of these sec-
ance customers can also procure the services they require online. tors by creating share-based income model and usage-based pay-
Therefore, it is estimated that the world will change with the ment method. Insurance market has begun to use similar models.
rise of financial technologies as banks, insurance companies and Insurance products that are customized via usage-based payment
asset management companies know it. The report indicates that model, which is especially popular in the auto line, offer signif-
FinTech companies simplify the life for customers especially with icant advantages for both insurance companies and customers.
their innovative approaches using technology; and underlines Also known as usage-based insurance, these products are mainly
that traditional service providers should take steps towards of- based on the configuration of insurance policy according to cus-
fering the same level and efficiency of services for their custom- tomer behavior and their way of usage. Product approach is not
ers. According to the statistics of Startup Watch, an institution based on a single-type policy logic, and premiums paid by the
monitoring the startup investments in Turkey, total investment policyholder vary based on the customer’s usage habits in the
amount by nearly 5 thousand startups have so far reached 431 area of insurance. This method is densely used in the auto line,
million USD. and is organized through telematics devices installed in vehicles,
smartphone applications, or the combination of both. Premium
Customized insurance products, artificial rates are determined according to the data flowing from those
systems. The systems measure how safe the driver uses the vehi-
intelligence and blockchain technologies cle and to what degree they comply with traffic rules by monitor-
are the major fields for startups ing habits like rapid acceleration, slowing down in turns, number
of brakes, or compliance to the speed limits etc. In short, good
driver behavior pays lower premiums, while careless drivers and
Primary development that has brought a new vision to the insur- drivers causing damages face higher amounts of premiums.
ance market via startups is the concept of customized insurance
products. Thanks to developing technologies, insurance products
and premiums are restructured according to the lifestyles of in- Startups can deal with many digital
dividuals. Thus, consumers can find and reach products and cov- processes
erages that can address their requirements much more easily,
and policyholders can pay their premiums in a way that fits their Artificial intelligence is another development that has a signif-
lifestyles.
icant impact on startups and transforms the insurance market.
There are more than 2 thousand initiatives working on artificial
intelligence all around the world. Technologic opportunities fac-
ing the insurance market, combined with the trend of InsurTech,
end up in artificial intelligence. Moreover, artificial intelligence
is estimated to be an important way in preventing the constant
decrease of profitability. Blockchain technology that connects
customers in real-time, agents and insurance institutions to each
other and stores the data on distributed databases and creates
a secure connection, constitutes another significant field of in-
surtech. Blockchain based technologies connect customers,
agents and insurance institutions to each other in real-time; and
establishes a secure connection by storing the data on distrib-
uted ledgers. Processes can be completed rapidly, securely and
cheaply through smart contracts. It creates a data ecosystem
and all the stakeholders can benefit from this advantage on equal
terms. Billing processes can be completed without any loss of
time, which increases financial efficiency. Stakeholders can of-
fer new services over this data platform and can expand their
area of application without being bound by cost increases. More
new startup initiatives are expected to emerge and technologic
advancements to increase in the insurance field; which will carry
the market further in the near future.

The insurtech report published by the audit and advisory firm
PwC analyzes the competences of InsureTech startups compared
to traditional insurers.