- FinTech as an enabler for better insurance services
- What InsurTech and its emerging innovations can offer to insurers and policyholders
- Final words,
Fintech is one of the fascinating fusions of technology in our daily life. Like any fusion cuisine, fintech attracts the interest of various investors to apply this breakthrough to different financial areas, such as mobile payment or crowdfunding. However, people tend to ignore another fast-growing aspect of fintech applications, which is Insurance Fintech.
FinTech as an enabler for better insurance services
Insurance Fintech or InsurTech/InsureTech refers to how the insurance area takes advantage of technology to create a tailored and secured experience for users. Thanks to this combination, businesses can enjoy a simple and frictionless insurance process without the burden of tons of paperwork.
Along with the behaviors of end-users shifting to more online activities, insurance fintech is the future of the service. It is no exaggeration to affirm that InsurTech is the driver for innovations in insurance. These statistics say it all.
Consumers, especially younger age groups, prefer remote transactions thanks to their convenience and little interaction with the companies. At the same time, the new generation is getting more and more familiar with the use of technology to complete every daily task. It is important to create a satisfied and advanced journey to fit their behaviors. Institutions are recommended to adopt a more customer-centric strategy to attract customers to buy their insurance service at least in the next year, or they will get behind in the game.
All can be done with the help of insurance fintech. Alfie Usher, the founder of Forces Compare, has evaluated: “Getting young people to purchase your insurance product is so important for business because they could renew each year and for the foreseeable future. […] “With Fintech today, insurers can offer far better premiums and products for young people – and not automatically overcharge them based on just their age, but taking thousands of characteristics into consideration.”
In the 2020 Insurance Barometer Study, 41% of surveyors chose to buy insurance in person, 10% less than that of 2016. Most of the changes were caused by people who are more fond of purchasing insurance online.
The insurance fintech trend is not only loved by buyers but also by multiple companies since many new businesses are born to focus only on InsurTech. The investments for the field climbs up from $4.4 billion to $6.8 billion between 2018 and 2019. Gary Plotkin, Global InsurTech Leader of KPMG, stated “We’ve always thought of InsurTechs as the acquisition targets. Now we’re starting to see the trend where InsurTechs are becoming the acquirers. I think this is a very important distinction and is why some are able to raise so much money.”
In the next part, let’s dive down to more in-depth reasons why going towards fintech applications in insurance is the favorite choice of companies at the moment.
What InsurTech and its emerging innovations can offer to insurers and policyholders
What insurance institutions can offer customers online
A tailor-made solution for every demographic based on rich data
Thanks to technological integration, namely Machine Learning, developers and users have better access and analytics to information. Both parties can contribute to personalizing the insurance process for maximum efficiency.
For example, institutions can create suitable program recommendations for customers, specifically in pricing terms. A study in 2019 has revealed an ugly truth for insurance companies: 73.7% of adults did not purchase a program as they could not afford it, while 18% decided there is no plan meeting their needs. By taking advantage of machine learning, organizations can customize more choices based on analyzed data and past behaviors of customers toward the insurance policies. Having more information gives insurers a better evaluation of assets and risk management. They can easily assess and calculate whether a customer can follow the full program or not. This is a huge change in attracting new customers and retaining old users.
Furthermore, insurance fintech is what younger consumers are looking for, as it shows more flexibility than traditional methods. The customers can work with their insurers to adjust their plans according to each life stage, lifestyle, and wellness change.
A closer interaction from multiple channels
One of the biggest challenges for insurance companies is how to engage with customers effectively. People are getting more annoyed to receive calls: They consider it a waste of time while not indicating any practical solution or introducing enough attractive programs for their needs. Another problem that may arise is that it can be difficult to have a proper consultation: Sellers are busy with paperwork or focusing on bigger customers and ignore smaller accounts.
With insurance fintech, these headaches will fly away!
Using Robotic Process Automation (RPA), customers can enjoy great support right from their homes with virtual assistants and chatbots. The technology can walk them through fundamental steps, answer frequent concerns, and lead them to the right person or department. Based on the interaction of customers, insurers can also have a quick view of what visitors want, therefore providing more proper suggestions.
With the help of AI, multiple businesses have successfully transformed their operation. Insurify, an insurance company based in Cambridge, Massachusetts, has generated insurance terms worth $170 million in premiums since 2017. This success is the result of applying a virtual agent and comparison platform with the automobile, home insurance, and life insurance carriers.
A faster and more streamlined process
In the past, customers struggled to fill out multiple forms and collect all needed documents, such as personal records, financial statements, or credit card history. However, with InsurTech, as data is connected cross-platform, consumers can easily sign up for insurance online in a few minutes, right in the comfort of their home. It also reduces the inefficiencies to a minimum by automating the underwriting and claim filing process.
Let’s take a look at the performance of two InsurTech companies featured on the 2021 Forbes Fintech 50 – Next Insurance and Hippo. Understanding the frustration of processing regulations, they have integrated Artificial Intelligence advances to fasten the procedure.
Next Insurance concentrates on providing insurance policies for small companies. The whole registration takes only around 10 minutes, and applicants can receive support 24/7 to certificate their contracts. Hippo takes another route to exploit the potentials of AI. By making the most of available data, from public information, satellite imagery to smart home devices, Hippo has created a breakthrough in their home insurance application and claims process. Customers can get a quote in 60 seconds, while the insurance plan can be sent in under 5 minutes.
A secured method to avoid human disruption
A gigantic benefit that insurance fintech brings is the elimination of human mistakes, which ensures higher security and privacy for both insurers and customers. Buyers may hesitate to purchase insurance online since it requires various personal information. However, with the help of online fraud detection, buyers can now rest assured that the whole process is confidential and will not be disclosed without their permission. Companies that aim for 80% digital and 20% human interaction in their operation have gained huge success, such as Policygenius, an online insurance market that nearly doubled their profit last year.
After the Covid-19 pandemic struck the global economy, consumers have realized they can do almost anything online. To adapt to the new movements and gain an advantage in the competition, It is high time for insurance companies to adopt fintech into its system. With the help of cutting-edge technology like AI, RPA, or machine learning, there are endless possibilities that await both investors and customers./.
Colette is a passionate Marketer/ Writer who fulfills her curiosity with new findings in every article. She values customer-oriented works as they may well prove the creator’s sympathy and adaptability.