The well known financial-tech startup Credit Karma has announced that they will be expanding their business into the insurance field. Their new service will start with a focus on auto-insurance policies. Though you have to imagine that if that service performs well they will consider expanding even more into the insurance industry.
Unsurprisingly, Credit Karma is bring a tech-tinged twist to their insurance model. The company created a tool that offers auto-insurance suggestions to the user by analyzing available government data on drivers and vehicles, combined with data from credit bureaus and public insurance filings. This provides more individualized suggestions and also completely bypasses the need for clients to spend copious amounts of time filling out long forms.
The insurance market has always been a data-driven industry. Which is why many startups feel the advent of big data and AI makes the insurance market particularly ripe for disruption. While big insurers are integrating technology into their business more, many other smaller businesses, like Credit Karma, are focusing on a specific niche of the insurance industry to get their foot in the door.
This is particularly true for technology companies. In fact, tech companies getting involved in the insurance industry has already become so pervasive that a new term has been coined to describe them: insurtech. Insurtech startups are looking to disrupt the current insurance industry by bringing technology into the fold from the beginning. According to the Insurance Journal “Insurtech companies raised $1.3 billion from investors in the first six months of 2018”.
Kenneth Lin, Credit Karma’s founder and chief executive, released a statement saying that “[Credit Karma] estimate that Americans are overspending on auto insurance by nearly $21 billion a year and believe that bringing simplicity and transparency to our members will help them save,”.
Currently, this service is only available in Texas and California but the company has said that they plan to roll it out to more areas in the United States soon.
The insurance industry is changing, particularly as more insurtech companies get involved in the scene. Will they be successful? Not all of them, but Credit Karma has a good track record so far, making them worth watching.
Of course, there is more to the insurance industry than just auto insurance. If you have any insurance needs, or just want to check on your policies, we encourage you to reach out to the staff at TGS Insurance. Visit www.tgsinsurance.com to learn more.