This Is How Fintech Will Transform The Insurance Industry
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Technology has significantly reduced barriers to access financial services. Digital revolution has empowered users to unlock several doors with their 'all access' cards, their smartphones. Today, it is difficult to imagine our lives without them. Such devices, and technology at large, has changed the game in a lot of industries, including insurance.
The New Normal
Nowadays, downloading apps and transacting through websites has become extremely common. People are used to a particular type of experience while interacting with online service providers. Top e-commerce brands have cracked the code to offering customer-focused services, and they keep on reinventing themselves. This constant reinvention keeps the users hungry for more. Moreover, they expect a similar kind of experience from any other online service provider. Thus, even if you are providing insurance, people expect the online purchase experience to be as simple and smooth as buying a trouser from an e-commerce website.
The amalgamation of finance and technology (Fintech) has resulted in customized products, better accessibility, and total convenience. Fintech makes use of computer programs and other technology to assist banking, insurance, and other financial services. The insurance sector has benefited from Fintech and will continue to do so in the near future. Purchasing insurance policies online can be attributed to Fintech.
Before digitization, the only way to know your insurance premium or track claims was to deal with the insurance agent or call/visit your insurance company's office. Now, most of the things related to insurance can be accessed and tracked online.
Meeting Consumer Needs
Customers are evolving as and when they are exposed to the possibilities of the online world. Their expectations also keep increasing with every new state-of-the-art service. Fintech has the potential to meet these expectations when it comes to the insurance sector. Also, future trends can be forecasted and specific services can be created for the customers.
Fintech fosters customer engagement. Every step of the user journey is made convenient, problem areas are worked on, and solutions are provided almost instantaneously. It is not a 'one size fits all' approach anymore, customization is the key. And Fintech makes it possible for insurance providers to create products and offer services that keep satiating customer's growing demands.
Connecting the Ecosystem
Modern insurance companies are harnessing technology to overcome hurdles. Old models are being disrupted and new solutions are looked into. Such an approach leads to customer satisfaction. Customer needs are fulfilled by integrating information technology with existing business models resulting in adaptability and cost efficiency.
Technology from other industries also benefits insurance companies. Use of telematic devices helps to arrive at tailored premium rates. Data from wearable devices such as fitness trackers can be analyzed while determining health insurance premiums. Technology connects the ecosystem and makes it convenient for all stakeholders.
One of Fintech's biggest impact on insurance is the cost advantage. Technology has broken geographical barriers and reduced operational expenses. Thus, untapped markets can be explored at lower costs. A large part of this price advantage is transferred to the customer. This way, the customer receives better service at a lower cost as compared to traditional insurers in the industry. Automation, cloud-based platforms, mobile-specific innovation, etc. will change the functioning of the insurance industry in the near future.
Currently, car insurance premiums in India are determined on the basis of certain generic factors such as age and type of vehicle. Because the factors considered to determine car insurance are generic, the quotes offered are also generic. Therefore, there is not much difference between premium paid by a safe driver and a rash driver. Technology will enable the shift from generic to personalized car insurance pricing. This personalization will not be limited to car insurance policies and will be applicable to other types of insurance as well.
If insurance companies have to stay relevant in the ever-evolving digital arena, they will have to inject advanced technology across functions. Operations will have to undergo continuous transformation to offer a seamless customer experience. From front-end to back-end processes, insurance companies must think 'customer first'. Fintech in insurance will aid this transformation.
Advertising, customer acquisition, underwriting, claims process, the entire insurance cycle will change radically. This will result in customers interacting with insurance providers in the way they interact with popular online service providers.
Fintech to Insurtech
Fintech is a broader concept, it includes InsurTech. Using technology in the insurance sector must be so penetrating that it widens the scope of insurance.Insurtech shouldn't be the distant cousin who visits home during vacations. It needs to have a permanent spot in the family's residence.
InsurTech is the way ahead. Those insurance providers who are starting their journey now, do not have legacy-related constraints. They will embark on this journey laced with technology-driven strategies. Those who have been on this path for a while, will have to befriend InsurTech eventually.