A policy on your smartphone: how has insurance changed in the 21st century?

At Lloyd's coffee house you had to go in person to insure a ship. Today you can get a car insurance policy by phone in a few minutes instead of queuing. This change has a name: InsurTech, that is, insurance technology.

• The meaning of the term. InsurTech refers to new approaches and companies that simplify the insurance business with the help of technology. In 2017 the OECD published a separate report on this field, studying the technologies and the funding of start-ups.
• Areas listed by the OECD. Along with examples of start-ups, the report examined blockchain, the sharing economy, robo-advice and data aggregation.
• Pricing by usage. In the usage-based insurance (UBI) approach, the price of car insurance is calculated not only from age or car make but from the actual distance driven and the driving style. The data is collected by a telematics device or a phone app.
• Parametric insurance. Here the payout is made without waiting for a loss adjuster, when a predefined indicator is met: for example, if the amount of rainfall in a given area exceeds an agreed threshold.
• Reducing risk. In its 2023 paper the OECD examined how technology helps not only to assess risk but also to help customers reduce risk themselves.
• An old idea, a new tool. The ancient seafarers shared losses, the Genoese guarantors spread their bets over many ships, Halley drew up a table. The essence is the same today: the small contributions of many people cover one person's large loss. Only the data is collected faster and the price is calculated more precisely.

Example (prepared by the author, hypothetical figures). Two drivers insure the same car; the standard policy price is 1 200 000 soum.

Both have the same car, but their risk is different. Digital data allows the insurer to see this.

The 1980s, the 2000s and today (the general picture, the author's summary).