Way back in 2009, a man had an idea that would change the world. Having spent US$800 hiring a private driver, Garrett Camp came to the conclusion that it must be possible to do things more cheaply. After much ruminating and long chats with friends, Camp came up with a simple solution: why not reduce the cost of rides by sharing them? From this, Uber was born.

In 2012, Uber unveiled another of its innovations with the creation of Uber X. Now, by using their own cars, Uber drivers could actually undercut regular taxis. Instead of frequently slow, late, and overpriced taxi services, consumers could now easily order a cheaper option, which would usually arrive within minutes, and even follow the cab’s progress on the Uber app. It was a formidable combination, and one that, for all Uber’s much-publicized recent problems, has created a global tech juggernaut valued at an astonishing US$70 billion.

Now imagine Uber had taken a different route. Imagine that, instead of just creating a service that made cabs cheaper and more accessible, Uber had begun by adopting a visionary, long-term strategy of embracing driverless cars. It would be difficult to argue against the assertion that, at some point, this investment would pay off handsomely. But if, in 2009, Garrett Camp had concluded that the best way to improve taxis – at that moment – was to work towards replacing drivers, how many people would have heard of Uber today?

Tomorrow’s Tech, Today’s Problems

The question, of course, is impossible to answer. Yet it is one that may have some relevance to where we are with InsurTech. Because while genuinely thrilling technologies promise to upend the insurance industry, they may not be answering the questions consumers have today. Questions like, why can’t I get insurance for my Airbnb property? Why do I have to buy full-contents insurance for just a few items in my home? And where can I find a really flexible, user-friendly insurance service online?

Before going any further, it’s worth looking at some of these groundbreaking technologies and why, despite their vast potential, they may not be best placed to underpin a transformation in the insurance world – especially for startups – just yet.

1. Artificial intelligence

   For all AI’s recent headline-grabbing successes – and its clear potential to disrupt the insurance industry – formidable medium-term barriers remain to its widespread adoption in InsurTech. For such a transformative technology, the operational risk in tightly regulated industries like insurance is, for most companies operating today, unacceptably large. And, crucially, insurers have to be able to interact meaningfully with human beings, something that remains a long way off for even the most sophisticated AI software or chatbots.

   Of course, things are changing quickly. But for companies to harness the power of AI today, they need vast amounts of three things: data, capital, and know-how. Almost by definition, startups (at least to begin with) are deficient in all three, making it very difficult to create a business focused primarily on the customer experience, rather than AI for its own sake.

2. Internet of Things

   Given that it could ultimately bring thousands of everyday items online, the IoT has been widely touted for its potential to transform the insurance sector.

   Indeed, the IoT has already scored notable successes in the insurance sector with motor insurance. But, paradoxically, rather than signal IoT’s imminent widespread adoption in InsurTech, this success more likely underlines the technology’s particular effectiveness in specific sectors. The widespread adoption of everyday devices linked to the Internet is some way off, meaning that, for now, adopting IoT technology would be extremely burdensome and slow for bigger insurance companies, and prohibitively expensive for startups.

3. Blockchain

   Perhaps the most eagerly anticipated technology in the world of finance, it would be easy to believe that blockchain is an idea whose time has come. As a public digital ledger of all transactions, blockchain promises a world of transparent and secure transactions that are practically impossible to hack.

   But in insurance, at least for now, the public nature of the ledger brings problems of its own – both for companies, who need to retain a customer base, and for consumers themselves, who will have concerns about personal data. What’s more, unlike, say, stock markets, the insurance market is far from being fully digitized and continues to rely on human interaction and physical transactions. This will undoubtedly change, but, for now, attempts to force the square peg of insurance into the round hole of blockchain seem unlikely to help optimize the customer experience.

Where the Customer Leads…

If these impressive technologies aren’t necessarily the ideal match for most InsurTech startups today, which ones might be? As I’ve suggested already, this could be the wrong question. As is well documented, InsurTech is among the hottest areas of FinTech today, because its long-established (and relatively unchanged) business models are increasingly seen as ripe for disruption by innovation and venture capital money. But also, as with the best FinTech ideas, the best InsurTech is being driven by a relentless focus on solving customer problems, taking away pain points, and answering needs that aren’t being catered to elsewhere. Consequently, the key question surely is, which technologies can create the ideal customer experience in the InsurTech sector?

Before answering that question, let me share exactly what it was that inspired me to start an InsurTech company. Like millions of other people, I decided that I wanted to generate a little extra income by letting out part of my flat via Airbnb. I knew that getting the right insurance would be crucial so I got cracking on what I thought would be a 10-minute job. I thought wrong. After literally hours on the phone, I found the sum total of one insurer that was prepared to offer the cover I wanted – for a king-sized fee. I was staggered that in a time when we think nothing of booking a room, office, or cab with a few clicks, it was next to impossible to find a decent insurance option for transactions in the sharing economy.

Going through this experience made me understand what it was to be a frustrated insurance customer – because I was one! It also made me see just how underserved by insurance the sharing and gig economies are, despite the phenomenal growth and even greater potential of those sectors.

Companies like Airbnb, BlaBlaCar, and, of course, Uber have thrived precisely because they’ve retained a razor-sharp focus on identifying a customer need and then, crucially, continually refined their services to match customer behaviour. How ironic, then, that insurance for these sectors has remained so stuck in outdated models, concerned far more with the insurers’ operational efficiency or long-established risk models than with the actual needs of customers. It may seem an obvious point, but this is exactly why InsurTech is so exciting: being driven not by technology but by customer needs, the sector’s potential to create a business every bit as dynamic and successful as the likes of TaskRabbit or Uber is huge.

Savvy Startups

Fortunately, some technologies, being used by incredibly smart startups, are already helping InsurTech companies meet those customer needs.

Take Leakbot. Already being offered by Aviva to its customers, this gadget attaches to pipes near the stopcock to detect leaks from pipes or taps, information it then relays to users via their smartphone. The early detection of leaks can help customers avoid the much greater expense and strife of serious damage should the problem continue unattended.

Another example is Jolt, an app that turns smartphones into dashboard cameras. While helping prevent fraud, so clearly a welcome development for the industry, Jolt can also help customers prove the authenticity of their claims, thereby making the claim process faster and fairer. Better still, by helping reduce fraudulent claims, the makers of Jolt believe that it could lead to significant savings in premiums for good drivers.

Across the InsurTech sector, numerous startups are creating slick, intuitive user interfaces that take so much pain out of the whole process of searching and applying for insurance – companies like Buzzmove and Fabric (and soon my own company, Tapoly). Yes, excellent user experience can be considered a minimum requirement but it is in precisely these fields that insurers have for so long lagged the wider financial industry, creating unnecessary headaches for consumers.

Eight years on from Uber’s tentative first steps into providing taxi services, the company – and the industry – are unrecognizable from what they once were. And having led a transformation of taxi services, the company now finds itself at the forefront of the push towards driverless cars, a technological change that, when it happens, will have truly earned the right to be called revolutionary. Crucially, though, Uber reached this point not by first focusing on radical technological change, but by improving the customer experience to something so much better that it was transformational. As InsurTech takes centre stage in the world of FinTech and creates new, exciting innovations, I hope this is a lesson the sector continues to embrace.