is something that will always remain an essential need and concern for most everyone. With risk and uncertainty everywhere, ensuring that what’s important to you is properly protected will always be a top priority for the vast majority of individuals.
Investing in health, home, property, and other forms of insurance is something most people are interested in, but navigating the process itself is a much more cumbersome procedure than one should hope to expect. The various types of coverage plans, criteria for eligibility, and many other obstructions to applying for insurance make this an extremely tiresome process.
However, the combining of insurance knowledge with Fintech technology—such as AI and data science—is becoming more and more common, and with it, both the industry and the application procedures have become considerably more simplified and accessible.
The creation of insurtech
Insurtech is the term for the mixing of Fintech into the insurance sector. By incorporating tech, insurance companies and brokers have become more successful and efficient, and insurance companies have been able to leverage Fintech technology to create personalized plan options for their customers’ specific requirements, and to streamline the course from research to application.
In addition to this, Fintech innovations have been creating new opportunities for insurance companies to both transform their business models, and to better the customer experience for their clients, for some time now, with investments in insurtech reaching a global record high in 2021.
Fintech innovations in insurance
The insurance sector has seen some significant innovation due to the incorporation of Fintech and the consequent rise of insurtech. Some of the most prevalent changes are as follows.
- Machine learning
- Data science
- Digital platforms
- Distributed ledgers (e.g. Blockchain)
- Smart contracts
These innovations are all a result of emerging technologies and work to improve efficiency, reduce costs, and improve risk assessment. In addition to this, however, there have been changes to business models which have also been developed through the incorporation of Fintech.
The difference in customers’ expectations today compared to in the past is one of the main drivers for the rise of usage-based, on-demand, and peer-to-peer insurance. But these expectations they hold are also a direct result of the way Fintech has been incorporated into many different aspects of their lives as well, and
What is the impact of Fintech in insurance on the customer experience?
One of the biggest problems within the insurance industry which Fintech has tackled has been attracting and providing value to a younger clientele, and the key way this is done is through a streamlined customer experience.
As mentioned, in recent years Fintech has become a part of nearly every industry. Due to this, customer demands have naturally shifted. Seeking out services alone is not enough, and instead, younger customer bases are on the lookout for efficient solutions in every aspect of their lives.
The accelerated digitization of financial transactions was expedited by the Covid-19 pandemic, and as a result, the pressing demand for digital platforms, digital banking, and all other Fintech related services has been recognized by all of these sectors.
Many insurance companies have seen the potential in the growing technology space, which made way for the rise of insurtech start-ups.
Nearly all insurtech companies are using the latest AI technologies to automate customer services, and to make sure that these services are readily available while still providing tailored, individual solutions to their problems.
Many insurance companies are making use of centralized apps as well. For example, Clear cover is a car insurance company which allows its users to file claims through the app, keep track of their billings, and view insurance ID information as well, so that everything is available to them on the API-driven platform.
However, this ease of access is not something that only younger clientele are benefiting from. The older generation is also reaping the benefits that come with the provision of insurance plans which are much more easy to comprehend.
The company Clover health working in conjunction with Medicaid in order to make sure that their customers are being given good health provider opportunities, and that they are aware of these opportunities as well.
Where is Fintech in insurance headed?
Fintech is making insurance more affordable and easy to maintain, and using advanced data analytics and emerging technologies to transform data that companies have into personalized, flexible policies, while also displaying a broad range of policy options for all forms of insurance.
However, the past year has been relatively difficult for insurtech companies compared to other industries which have been making use of Fintech. Auto insurer Root, property insurer Hippo, abd renters insurer Lemonade have faced dives in their stock, due to concerns regarding profitability.
Yet in spite of this, insurtech companies have also seen massive growth in funding 2021 to reach $15 billion, and after experiencing some decline again, currently remains flat. Although it may look like the future of Fintech in insurance is looking a little grey, some niches of insurtech continue to thrive.
For example, Newfront provides business insurance and employee benefits, and is effectively utilizing Fintech technology to sell it. The increase in hacking and fraud has led cyber insurance company Coalition to grow its business business significantly, with its annual premium revenue hitting $315 million last year, up a whopping $56 million from 2020.
Suffice to say, Fintech in insurance is here to stay, and as more companies begin to fully adopt it, more innovative solutions will be developed for any remaining hurdles that the industry may currently be facing.