InsurTech companies are really getting their claws into the insurance industry. New products are coming to market, processes are being overhauled and end customers are benefiting from the positive disruption. From Zego’s flexible policies to By Miles pay-per-mile car insurance, new solutions are rewriting the rules of insurance to better serve customers.
But are these new technologies helping or hindering insurance premium tax (IPT) compliance or making it more complex? Let’s take a look at some emerging trends and their effect on the insurance industry.
Automation and artificial intelligence
Some of the greatest disruptors are artificial intelligence, machine learning and the rise of automation. Though still in the early days of implementation, these technologies are gaining ground and being used by InsurTech startups to source the best policies, generate contracts and accelerate the filing process.
New insurers are adopting these capabilities too, as they have the advantage of starting up with a fresh order book and no legacy technology.
For larger cross-border insurers or those with sprawling IT estates, it’s not as straightforward, however there are still plenty of business processes that can be improved with targeted AI, data science and automated technologies.
Short-term, pay-as-you-go and stop-and-start flexible insurance have boomed in recent years with everything from business insurance for freelancers to pay-per-mile car insurance offering customers more tailored, cost-effective policies.
Consumers and businesses are now accustomed to more adaptable services. Customers have come to expect a tailored approach, one where they can chop and change their policy in line with their needs – nobody wants to pay for services they’re not using.
Whilst these offerings provide many benefits to customers, they can cause headaches for insurers if not managed correctly.
IPT is not as agile as writing new insurance policies – often IPT filing occurs monthly or quarterly and there is potential for errors if policies are not filed and managed accurately, as well as the risk of over or under declaring premium tax liabilities. And errors here can be costly, either by eroding profit margins or making premiums uncompetitive at quotation.
IPT still needs to be correctly applied
This new wave of InsurTech has certainly reinvigorated the market and provided additional low-cost options to consumers. And IPT still needs to be applied as for any other non-life insurance policy.
For shorter term products built on chatbots, automated brokerage and data science, insurers should bear in mind that tax processing varies for each policy with some due early on inception and others on maturity of the policy. With many of these policies being processed in bulk, insurers need to understand how IPT is calculated for each individual policy and how it should be applied.
Understanding and planning is key for insurers to take advantage of the wealth of new InsurTech available. Get in touch with our team if you’d like to discuss how our IPT solutions help tax filing and processing.