Many will have heard of ‘fintech’, a term described at the recent World Economic Forum as the use of technology and innovative business models in financial services.

Two insurance-related derivatives of fintech are ‘insurtech’ and ‘reinsurtech’. These terms are used to describe the various emerging technologies and innovative business models that have the potential to transform the insurance industry and reinsurance industry respectively (hereinafter used interchangeably as insurtech).

For the purposes of a topical example of insurtech, we can look to Bermuda’s roads. The recent coverage in this newspaper around road safety highlights the shockingly high road traffic accident and injury figures in Bermuda. Local insurers may decide to employ telematics (sensors that are able to process and distribute information via telecommunication devices) on the vehicles of insureds to monitor speed and any number of other characteristics. The collected information could then be used to eliminate dangerous drivers, or change dangerous driving behaviour by increasing premiums for certain insureds or demographics of insureds, for example.

Insurtech is relevant to nearly all if not all areas of the insurance and reinsurance industry, and according to a report compiled by Aon, has garnered approximately US $14 billion in cumulative investment.

The focus of this article will be on captive insurers, and more specifically the potential for Bermuda to play host to captives harnessing insurtech.

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