5 Ways FinTech Is Driving Advances In Insurance Because of the rapidly evolving situation and aggressive demand by consumers, many insurance companies are partnering with FinTech companies. Know why.
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We are now living in a tech-savvy world, where everyone – urban as well as a large section of Tier II, Tier III cities – has access to smartphone and internet. This has become the key to do everything, anywhere, anytime, with just few simple clicks and in practically no time. Consumer behavior and expectations are also changing, and so is the manner of evaluating and accessing goods and services. This has influenced financial industry including insurance and we can say that technology is disrupting the way we chose insurance products (of any type) today. The consumers are adapting to this change because of, inter-alia, the convenience and empowerment factor, which comes from ease, unbiased decision-making, and speed of transaction.
Because of the rapidly evolving situation and aggressive demand by consumers, many insurance companies are partnering with FinTech companies that provide solutions to catch up in broadening the spectrum of services and transactions that customers can do over their mobiles and other hand-held devices.
Such partnerships come with huge customer benefits:
What was earlier about just signing the dotted line as directed by an insurance broker(and no questions asked) has become about taking well informed and most importantly, independent decisions for the consumers.
Today, customers only have to key in their requirements at the insurance marketplace and check the eligibility criteria to get instant offers to compare all life, general and health insurance companies and thereafter buy the products completely online instantly. Technology is ensuring that the all the customized insurance offers available in the market are made accessible based on the customer profile on one screen, instant and real time, to help customers make the best selection.
The online virtual nature of the marketplace does away with the need of brick-and-mortar structures and associated work force, bringing down the establishment costs for the insurer. This benefit gets transferred to the customers in the form of lower premiums and processing costs.
Security is paramount when it comes to finance, and FinTech companies take a very serious view of security. A marketplace like BankBazaar.com, which has the highest data security standards in place and a no-spamming policy, makes the customer feel confident about transacting online.
Another convenience of the online model is consumer's familiarity and acceptance to the process, because is it same as any other online shopping experience. For this reason, the pressure to innovate technologically is high in the insurance sector, and correspondingly, so are the expected returns.
On one hand, these potential benefits for customers are putting pressure on insurance providers to go digital. On the other hand, going digital can bring in several positives, and not just in costs, to the insurance companies themselves that they cannot afford to neglect. Partnering with an online marketplace is the first step that the insurers can take, as it is a viable solution that can provide substantial results with a low investment. Here are five excellent ways technology is driving insurance and improving it for the better.
The online space is an impetus to the insurers to develop simpler and more targeted products that are easier to understand by providing a larger-than-ever platform that comes equipped with the tools to help insurers reach these products to the right audience.Such simplified products are important for not only first time buyers of insurance but also those who look for systematic savings. Moreover, such products are also lower in loaded costs and commissions and, hence,are a win-win for both the insurer and the insured.
Online presence increases touch points and reduces the costs both for the customers/policyholders and for the insurance companies. This shields the insurance companies from high operational cost pressure – something that is a cause of concern for most of the companies, except the top seven and few others. Unless they attain the critical mass of new business and have a healthy renewal book, profitability is still far away. Operating through brick and mortar offices across the country is not yielding results and the expected reach. A digital strategy, on the other hand, can not only increase the business reach but also take the company towards profitable growth.
E-KYC, E-sign and stamping, and finally e-policies are making steady inroads,and with the changing mind-set, the time is not far off when insurance will be purchased instantly with no physical paper exchange. Automated claim processing and upload of documents from anywhere anytime is becoming a reality that will help in processing claims faster.
Further, the proposed central repository for KYC and Digi lockers will also help all financial institutions to access the KYC records of a customer centrally as well as allow them to e-sign documents. A platform that allows you to provide your customers with all these facilities and more in a highly secure manner can make life much simpler, not to mention faster.
A platform like BankBazaar.com, which sees over 9 million visitors per month on an average, provides enormous visibility – something which you would be hard-pressed to replicate. This becomes true when one considers the cost factor associated with doing things in-house. Apart from that, the proliferation of mobile internet is rapid in both urban and rural areas. At BankBazaar.com, we have seen a lot of traction from tier-2 and tier-3 cities and the number of online visitors from these locations is growing exponentially. This opens an entire new geography for insurers to target without depending on brick-and-mortar set-ups.
FinTech is a rapidly growing sector. Moreover, the business model of strong FinTech companies, unlike other online service providers, is very stable: For instance, there are no discounting schemes to eat into margins; stock and inventory expenses to be factored in; or order fulfilment or distribution capabilities to be worked out. These and many more such factors increase the possibility of making the business profitable. So, partnering with a strong FinTech company with a credible strategy and a clear growth trajectory can prove mutually beneficial to both.
Hence, Insurance and technology partnership will defining the future of Insurance policy purchase as the advantages are obvious. These opportunities are strong reasons for Insurance companies to align their strategies and leverage FinTech to the maximum. And it is just the beginning. The future belongs to AI-based virtual insurance agent that can provide real insurance quotes and recommendations based on clients profile/need analysis and underwriting of policies on the basis of data provided by wearable technology, i.e., step and heart beat monitor, driving, calorie counters, exercise and other social habits of prospective consumer.Adaption of e-Aadhaar/KYC, selfie for photograph, Video-based IPV, e-sign, e-stamping of policies, and app-based policy management, all of which will virtually reduce human interventions at every stage as well as increase reach and turnaround time, is around the corner.
This is one of the reasons regulatory bodies such as the IRDA are working on policies and initiatives to increase the reach of insurance sector and online is one such means. Between the E-KYC circular of UIDAI and Web Aggregators regulations of 2013 to the Revised Guidelines on Insurance Repositories and electronic issuance of Insurance Policies in 2015 and the Exposure Draft of the Insurance e-commerce Regulations in 2016, the IRDAI has been enabling regulations like distance marketing, telemarketing, web-aggregation, e-insurance platforms/e-commerce guidelines (proposed) and e-insurance accounts/repository framework.
The FinTech sector, with its paperless, simpler, faster turnaround model will be a game-changer. As drivers of technology, a strong FinTech company would be leading this trend. The first movers in the insurance industry would be able to create a large channel in itself of online users and buyers. And why not, the advantages overweigh the traditional methods of selling and servicing. The insurance and FinTech sectors working together cohesively as one unit drawing on the strengths of each other can provide exceptional services to the consumers. Ultimately, that would be the biggest win for both insurers and customers.