Israel is at the forefront of the burgeoning industry of insurance technologies (InsurTech) – including machine learning, cyber-security, and big-data analytics.
Source: NoCamels:
With strengths in areas such as FinTech and cyber security, Israel has become a leading player in InsurTech. Of the 15 most funded InsurTech companies in 2017 globally, five are Israeli or have an Israeli founder, according to Israeli venture capital firm Tel Aviv Partners.
Insurance has traditionally been viewed as an over-regulated industry that lacks innovation. Many insurance companies use outdated infrastructures, and their processes are wrought with redundancies. The barriers to innovation have, until recently, caused startups to avoid the sector and channel resources instead into industries such as banking. So what’s changed?
Insurance companies have found that they can no longer get away with inefficient operations. As fraud prevention and big data management become more important, insurance companies have struggled to keep up.
Amongst millennials, there is a growing demand for personalized services and smooth user experiences. Meeting with insurance agents, faxing information, and waiting weeks are no longer acceptable for the tech-savvy generation.
For traditional insurance companies, the rise of InsurTech is a “wakeup call to show them that things could be done differently,” Yoav Tzruya, a partner at venture capital firm Jerusalem Venture Partners (which invests in InsurTech), tells NoCamels.
Israel has seen success in other FinTech sectors, such as online payments, and Israeli startups applying this technology and expertise to InsurTech are making waves around the world.
One of them is Lemonade, which is already among biggest names in the global InsurTech industry. It is a peer-to-peer home insurance startup leveraging artificial intelligence. By replacing brokers with bots and machine learning, the company offers lower costs, faster results, and packages that are tailored to the user. Lemonade is the first company to have an insurance claim handled and paid by AI – it took three seconds.
Founded in 2015 by Israelis Shai Wininger and Daniel Schrieber, Lemonade has raised $60 million in four funding rounds, and by June of this year has insured over 14,000 homes in the US. “Technology drives everything at Lemonade,” according to Wininger. “From signing up to submitting a claim, the entire experience is mobile, simple, and remarkably fast.”
Another Israeli InsurTech startup, Hippo Insurance, has shifted the home insurance process online, allowing users to get a quote in about 60 seconds. Average insurance companies require you to answer 60 questions to get a quote; Hippo reduces this to 12 or 13, according to the company.
The startup also innovated the insurance product itself, offering coverage of items that are used today such as home office equipment, and claims to reduce inefficiencies and therefore cut prices by 25 percent.
Hippo is pushing boundaries in predictive insurance. Using artificial intelligence, satellite imaging, and sensors, they’re working on automatically updating your insurance if you build a new room, or warning you if you have leaks in the house.
Founded in 2015 by Assaf Wand and Eyal Navon, Hippo has so far raised $14 million. Its services are currently offered California, with plans to expand to the rest of the US.
Observers are confident that InsurTech will continue to be an attractive target for investors. Tzruya believes that instead of replacing traditional insurance companies, InsurTech startups will simply encourage them to innovate: “They will not take a big bite out of the insurance market as a whole, but they will be kind of lighthouse companies that will show the way as to how things can be done.”
Israel Trade and Economic Commission in Sydney, Australia 