The insurance industry globally is worth a massive $500B per annum in fees and growing. Buying insurance is often seen as a grudge purchase, but no matter how we may dislike paying the monthly premiums, it’s simply too powerful a risk-mitigation tool for individuals and businesses alike to ignore or go without.
Competition in the industry is fierce and industry participants are constantly looking for new and innovative ways to reduce costs or improve customer experiences so that they can gain a competitive edge.
It should therefore not come as a surprise that AI is starting to play an ever-increasing role in the insurance industry.
The Role of AI in the Insurance Industry
Insurers have a treasure-trove of big data, the main ingredient needed for AI to be successful. This can be leveraged via AI to create more meaningful marketing messages and more personalized services, increase customer engagement, target the right customers, and sell the right product to customers.
AI could potentially impact the insurance industry in many ways. It is already used in underwriting, claims processing, customer service, and fraud detection. To improve customer experience, many insurers have started investing in virtual assistants such as chatbots, to give one example.
Many insurers have also already started experimenting with other new ways in which they can incorporate AI into their day-to-day operations. Insurtech startups are also using AI to develop solutions to enhance customer service, create better underwriting models and streamline operations. Although AI provides an opportunity for traditional insurers to improve their competitive edge, implementing AI is not always simple or easy. Insurers are facing many challenges when integrating AI into their existing technology due to issues such as infrastructure compatibility, privacy, and data quality.
Gefen International (GFN.ASX) Plans to Disrupt Financial Advisors’ and Insurance Market with AI
Gefen has introduced AI technology that automates many of the sales process advisors use in the financial planning and insurance sectors.
Although disruptive technology has in the past 20 years shifted power from the product owner to the distributor (think online hotel bookings and riding apps), some products such as financial planning and insurance have regulations and complexities that will always require a customer ultimately dealing with a human advisor.
Gefen International, listed on the Australian Stock Exchange (ASX), plans to change that and has embarked on disrupting the traditional model by allowing financial and insurance agents to grow their sales rapidly by digitizing.
Gefen’s Moments platform was designed to specifically disrupt this traditional ecosystem, which includes customers, advisors/agents, and carriers (financial or insurance corporations).
The platform does however not try to replace agents in the sales process as it knows that they are necessary to the process.
What it does, is provide a highly compliant platform that can be leveraged by advisors and includes tools like sales & marketing, and messaging that would normally not be available to them.
The Moments platform essentially connects consumers, carriers, and advisors in one network, and automates their interactions. Customers’ digital journeys and data are analyzed by the technology, and it then provides automatic insights into their buying preferences and past decisions. This allows advisors to offer customers more relevant options.
The platform reduces the overall customer acquisition costs for corporations, which leads to increased revenue per customer for carriers.
According to Gefen CEO and co-founder, Orni Daniel, Gefen runs its business at a high gross margin of more than 80% and has just signed up five big agent networks.
Gefen’s Rapid Growth
Gefen, based in Tel Aviv, was founded in 2016 to develop digital services and tools for real estate, finance, and insurance companies. It is particularly appealing to customers in heavily regulated industries and offers them solutions for marketing, content creation, sales, messaging, etc.
Gefen’s platform is effectively a digital trading arena that can be used by highly regulated enterprises’ agents to sell intricate products to customers. The company’s revenue is derived from a 30% commission from agents that finalize deals through it and from the sale of licenses for platform usage.
The company believes that it will also be able to generate revenue from advertising solutions in the future.
The company grew substantially in the first half of 2021. The number of transactions done on the platform grew to 2.4 million, an increase of 182%, while the number of end customers increased to about 123K, up 105%. Two major insurance companies, Manulife and Generali are among its customers.
In July 2021, Gefen International A.I. Limited raised NIS 60 million (A$25 million) at a valuation of NIS 308 million ($128 million AUD). According to an announcement by the company, the IPO was supported by a high-quality shareholder base which included retail and institutional investors, together with strong support by existing Gefen shareholders.
Gefen’s model and AI technology reduces costs for agents and insurance companies, which can be offset to consumers, while also generating new revenue streams.
The company’s current low price is severely undervalued and likely explode as more markets open as companies that don’t use Gefen Technologies AI operate with higher manpower costs as their agents spend hours researching the best deals manually. This cost is naturally passed on to consumers, leading to higher insurance costs.