How is the insurtech landscape in Latin America?
The insurance market grows exponentially, driven by the largest number of insurtech companies.
The sector attracts more and more investments and its expansion does not stop: the companies that make up the sector in the region have already raised US $ 125 million from venture capital funds since 2016, while globally financing exceeds US $ s 14,000 million.
Also, in 2018, the number of Latin American start-ups linked to insurance increased, mainly, based on Argentina, Brazil, Chile, Colombia, Mexico and Peru, according to the Fintech Radar report, that the Finnovista organization developed.
The presence of more technology companies in the industry not only forces traditional players to adapt, but also generates greater competition. More than 70% of insurers already use cloud-based solutions, which reduces barriers to entry to the business and enables the emergence of new ventures. Thus, companies must increasingly focus on providing a higher quality service , in a context of permanent change.
How to boost innovation in the sector
Technology is the main catalyst for the transformation that the industry is going through. However, the digitalization has to be permanent: the insurtechs must become agents of change and urge the other players in the market to join the challenge. How to start traveling this path? Four keys to keep in mind.
1- Transform the existing value chain : it is about innovating in the different links that make up the chain, from reimagining core business (for example, thinking of new solutions for other consumer segments) to redesigning the user experience (by creating for greater engagement ) and optimize processes (through the use of tools that allow productivity and cost efficiency to be boosted, such as data analysis, Artificial Intelligence and the blockchain) .
2- Enable new types of capabilities: it is essential to take advantage of emerging technologies to generate added value in the offer. How to carry it out? Accessible methods can be used (such as the use of data to reduce customer response times, the use of Artificial Intelligence to process claims faster and the option of sending photos so that users can account for the situation that affects), even some more sophisticated tools such as the use of aerial drones to create probabilistic models regarding the losses that a natural catastrophe can cause and thus estimate the risks.
3- Create new products: along with the advancement of technology, new threats also appear, such as cybercrime. Devising a policy to protect against this risk is part of the challenge facing insurtechs. Today, the market presents a lot of opportunities and demands the creation of new solutions.
For example, this year, 123Seguro became the first broker in the region that offers the online contracting of life insurance, without having to complete forms or carry out complex procedures. In this sense, the permanent testing of new projects through constant monitoring makes it possible to detect points of improvement and prevent the organization from incurring inefficient expenses.
4- Transcending borders: beyond innovating and providing added value, the sector has to think about providing access to new customers and markets. That is, companies must focus on developing products that have to do not only with the industry in which they operate.
The insurtech assume a great task: to reach a good part of the population that is not covered. If you take into account the low penetration of the financial sector in general, and of the insurance segment in particular, added to the fact that in 2025 about 79% of Latin American inhabitants are expected to have at least one smartphone , according to a study by Mobile Economy 2019 , the industry's potential is immeasurable.