Artificial intelligence disrupting insurance sector

Big data and artificial intelligence (AI) is where startup funding is concentrated in the insurance sector. With insure tech boasting a transparent and near instant alternative, a disruptive 21st century beckons for underwriters.

Seeing the short-term opportunity

Janthana Kaenprakhamroy, CEO and founder of Tapoly, saw a gap in the market when she couldn’t find cover for an Airbnb let, which are, by nature, short-term.

Freelancing in the so-called ‘gig economy’ is growing, from Uber drivers to Amazon deliverers. This self-employed sector, which also includes many in creative industries like film crews and music producers, is where insurance technology startup Tapoly is aiming to apply artificial intelligence (AI) to big data, to offer short-term insurance in minutes.

This is a first for the insurance sector, Kaenprakhamroy says. This is because barriers to entry are high, due to regulatory capital and personnel requirements, as well as knowledge. And to make use of AI and big data requires raising substantial sums.

Tapoly shortens the traditional insurance questions to just a key few, as social and public data allows its machine learning AI to fill in the gaps. Prospective clients must opt in for their online behavioural data to be available.

From 18 May, the European Union’s General Data Protection Regulation (GDPR) comes into force. From then, consumers’ information should remain private unless they wish to make it available. When personal data is aggregated into big data, it must be anonymised.

How AI and Big Tech gives Tapoly an edge

Technology is not only disrupting how insurers assess risk, but also how efficiently and quickly they can offer cover.

Machine learning offers Tapoly more than just data crunching. It aids decision making. It’s more immediate, as opposed to the traditional method where customers can wait for a few days for cover to be underwritten.

It can also determine risk pricing, as well as being cheaper simply because clients are only paying for the cover term required.

And by determining those key questions, AI improves the customer experience. Of course the risk for the customer is that their behavioural data may expose risks to the insurer which could increase their cost of cover.

Building business is the priority

The exit for startup investors can be a listing, or being bought by an established company. Kaenprakhamroy says it is too early to consider an approach by a big insurer as she values the startup’s independence to push through its core strategy.

Culture needs to change to reach equality

The Tapoly CEO says there may be many events dedicated to women in tech, but still only around one in six IT techs are women. There is still a long way to go, she says, with the culture within families needing to change.