In recent years, life insurers have faced several challenges due to changes in market conditions and customer preferences. Inflation pressure, which has increased premiums for new clients, life insurance cash value, and real value payouts, has slowed down growth and decreased customer satisfaction. Simplicity and the next level underwriting are key factors that affect customer satisfaction with life insurance. Although insurtech players such as Bestow, Ladder, Ethos, and Bequest have explored simplicity, it still has a long way to go before becoming the industry standard.
To achieve simple and frictionless life insurance, underwriting has become a key factor in the new global context. The basic definition of underwriting "taking risk for a fee" is not as simple as it sounds, especially in a highly volatile environment where premium real value has fallen 2% and higher profitability products are being demanded, diminishing the attractiveness of life insurance coverages.
Qumata is one of the startups helping to transform life insurance products and enhance underwriting through technology, with the aim of improving the attractiveness of life insurance products. Qumata recently received a $13 million funding round backed by tech giant Tencent. Qumata's solutions are designed to improve clients' underwriting and end-customer experience by calculating personal risk. The company claims that it can predict the current and future state of one's health accurately without any questionnaires or medical exams. Instead, Qumata uses customer smartphone data and integrates it with health tracking apps, wearables, and other data provided by partners.
Qumata's success could open the door for new ways for life insurers to make underwriting, and these models are already seen in other insurtech companies such as Lydia.ai and Taiwan Life Partnership, which illustrate how shared data can enhance underwriting. Users consent to data usage from their health apps, which enables faster underwriting. In this model, Taiwan Life could increase sales conversion by 22% and reduce policy issuing from two weeks to five days.
Qumata, founded in 2017, has received a total of $25 million from different investors, including MMC Ventures, Mass Challenge, and Tencent. In 2021, it reached new markets with the AIA partnership, which incorporated its underwriting solutions into its digital channels. Qumata's fast traction relies on easy API integration, which utilizes existing insurance offerings and improves clients' products. API technology-related insurtech companies grew 62% from 2021 to 2022, according to the last NTTDATA Insurtech Global Outlook. The strong signal that connects to the insurance ecosystem, uses existing distribution channels, and insurance offerings is more suitable for current market conditions and is seen across the insurance sector. Other examples like Wefox, bdeo, and Pendella technologies from different lines of business have shown fast traction and may be pointing to the actual preference for investors in the insurtech market in recent times.
Furthermore, Qumata competitive advantage comes with the product uniqueness market fit. On one side, the Insurtech enables insurers to pursue more simplicity and a next level underwriting in their offerings. Additionally, Qumata services includes a Proof of Concept that shows its clients an equal or lower loss ratio, guaranteeing higher efficiency. Together with the faster delivered underwriting process that shrink the speed from weeks to days, makes the traction of this startup even stronger. The application of Qumata Intelligent software reaches new potentials with Tencent leading the last funding round, which opens a discussion on the super apps role in the insurance industry, especially in Asia.
Life insurers have been facing significant challenges in recent years, including inflation pressure, decreased customer satisfaction, and the need to simplify the underwriting process. However, insurtech startups like Qumata are helping to transform the industry through technology, using customer smartphone data and other information to calculate personal risk and enhance underwriting. With the success of Qumata and other similar startups, the insurance sector may see a shift towards API technology and easy integration with existing offerings, as opposed to trying to disrupt the entire value chain. As the industry continues to evolve, underwriting will be a key area for improvement, and companies that prioritize it will be well-positioned for success.