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The Impact of Artificial Intelligence on Selling & Distributing Insurance [PART 2]

Tue, 13 Jun 2017 18:53:19 +0000 / by Max Kraus

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In Part 1 of our Artificial Intelligence (AI) Impact on the Insurance Value Chain series, we looked at the impact it has on underwriting and risk. However, before an individual can be underwritten, an insurance product still needs to be sold and distributed, which is what Part 2 of this series will focus on. According to McKinsey, this step of distribution and selling is the most crowded in insurtech, with nearly 40% of startups attempting to change how consumers buy insurance. 

Two insurtechs that are disrupting insurance distribution are Insurify and Lemonade.

Leveraging existing platforms

The MIT-founded Insurify is an auto insurtech that closed a $6M financing round in May from Massmutual and Nationwide, and has since launched a virtual assistant on Facebook Messenger. This virtual assistant acts as a broker, interacting with the consumer via Facebook Messenger to assess their cost and policy benefit preferences. These preferences are used to determine potential insurers for the consumer, which are then recommended based on the insurer’s customer service and product reviews.

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By using AI and natural language processing, Insurify was able to analyze over 20,000 car insurance chat conversations to build the virtual assistant. With over 70% of American consumers shopping for their auto insurance online in 2015, Insurify's goal was to simplify and speed up the purchasing process to capitalize on the $215B auto insurance industry.

 


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Creating innovative platforms

By contrast, New York based Lemonade opted to build its own distribution platform. Its mobile application allows an insured to purchase renters or home insurance in under 2 minutes, exclusively interacting with Lemonade’s AI chat bot Maya. Lemonade has raised $60M from venture capital heavyweights Google and Sequoia, as well insurers XL and Allianz. Only time will tell which AI distribution platform is more effective, Facebook Messenger or a company-developed app. However, with 84% of a mobile user’s time spent using just 5 applications, with Facebook being the top application, the Facebook Messenger AI distribution play appears to have a head start.

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Increased traction

Artificial intelligence insurtech startups have continued their fundraising hot streaks, with Canadian based Mylo raising $750K last week. Close to $400M has been committed to AI research and innovation since 2017, positioning Canada to become a global hub. All in all, Mylo is just the beginning for Canadian insurtechs. All around the country, moves are being made to invest:

  • The Government of Canada funded a $125M strategy to attract and retain top talent, as well as burgeon research into the AI space.
  • $170M was committed to the University of Toronto affiliated Vector Institute by tech heavyweights Google and Uber, insurers Sun Life, Manulife and Intact and both the Ontario and Canadian federal government.
  • In early May, the Quebec government launched a committee to spearhead research and innovation in AI, backed by $100M. 
Want to know more about the impact of AI on the insurance value chain? Tune in next week to get the scoop! Join our community of blog subscribers to get the next article straight to your inbox.

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Topics: Innovation, InsurTech

Max Kraus

Written by Max Kraus

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