If you want to save money on insurance, and know how to navigate the new products and offers coming your way from insurance companies, there’s a new word you should know: “insurtech.” This is a category of business that combines insurance and digital technology in new ways — hence the name. Some insurtech companies sell insurance products directly to people, while other insurtech companies work behind the scenes with insurance companies to improve processes or discover better ways to manage risk and serve customers.
Insurtech is a similar concept to fintech (“financial technology”). Fintech companies like PayPal and Chime have changed the way that people make payments and manage their banking. In the same way, insurtech companies could change the way people get homeowners insurance, auto insurance, and other coverage to protect their personal finances.
Let’s look at a few examples of insurtech companies and see how they could save you money on insurance coverage.
Insurtech: What it is and how it works
Like banking, insurance is a competitive and highly regulated industry where customer loyalty matters. The best insurance companies are always looking for new ways to streamline processes, improve efficiencies, cut costs, and manage financial risks, while delivering a great customer experience. Insurtech can help with all of these goals.
While all big insurance companies use technology in various ways, the field of insurtech is often led by smaller startups that operate outside of the traditional big national insurance companies. Insurtech companies are typically trying to bring new concepts and different business models to the insurance industry.
Insurtechs often sell special policies and products designed for groups of people who might have been underserved by traditional insurance companies, such as pet owners and motorcycle riders. Many insurtech companies use data science, machine learning, and AI to create innovative ways of managing insurance coverage and underwriting.
Read more: check out our picks for the best car insurance companies
What insurtech means for insurance customers
No matter what kind of insurance coverage you need, you might want to consider getting insurance from an insurtech company. Here are a few examples of coverage you can get.
Auto insurance
One example of how insurtech is changing auto insurance is telematics insurance. This is based on tracking driving data with mobile devices. Several big-name insurance companies now use telematics programs to offer personalized car insurance and reward people for safer driving.
Some insurtech startups have also gotten into the auto insurance business. Metromile (owned by Lemonade) offers pay-per-mile car insurance. Voom Insurance is an insurtech that offers pay-per-mile insurance coverage for motorcycles and ride-hailing drivers.
Homeowners insurance
One of The Ascent’s picks for best homeowners insurance, Lemonade, is an insurtech. Although it’s currently only available in 23 states, Lemonade got high marks for being the best homeowners insurance for tech savvy shoppers.
Homeowners insurance from Lemonade starts at $25 per month, although your exact costs depend on your home’s size, age, location, and other factors. Approximately 96% of Lemonade customers have had a positive experience with processing claims. Lemonade also offers renters insurance — starting at $5 per month — to protect your belongings from theft, damage, and disaster.
Life insurance
One of The Ascent’s picks for best life insurance companies, Bestow, is an insurtech company. Bestow offers life insurance without a traditional medical exam, making it easier and faster to get coverage in a matter of minutes. Depending on your age, health, and other factors, you can get term life insurance policies of $50,000 to $1.5 million with Bestow’s easy online application process.
Lemonade also offers life insurance, along with its home, car, and pet insurance coverage. Like Bestow, Lemonade offers term life insurance with no required medical exam.
Pet insurance
Some of The Ascent’s picks for best pet insurance companies are insurtechs like Lemonade and Trupanion. Pet insurance is often a good fit for insurtechs because they can use technology in ways that specifically meet the needs of pet owners and veterinarians.
For example, Trupanion uses AI and machine learning to quickly, accurately, and efficiently process claims, and pay vet bills directly to the veterinary hospital at time of checkout. Many pet owners also prefer to use digital-first processes, such as submitting vet bills for reimbursement via mobile app.
Bottom line: Startups like Lemonade might be able to offer competitive pricing while still protecting you with generous coverage. Insurtech startups use the power of data, AI, and machine learning to find lower-cost ways to offer insurance coverage. Insurtech is also being used by big-name insurance companies to offer unique new products and types of coverage, like telematics car insurance. Depending on what kind of insurance you need, if you see the word “insurtech” in an insurance ad or offer, pay attention — insurtech may be able to save you money.
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.