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India's fintech journey
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Fintech and insurance
Contrary to popular opinion, the combination of technology and finance hasn’t just revolutionized the banking industry. In fact, it has touched many other financially-related industries as well, with insurance being one of them.
Fintech and insurance has essentially transformed the entire industry and has led it to tremendous levels of growth. In this chapter of Smart Money, we’re going to be looking at fintech insurance and the different ways through which it has made the industry more efficient.
What is insurtech?
Fintech and insurance, commonly dubbed as insurtech, is a burgeoning field that focuses on applying cutting-edge technology such as data analytics, artificial intelligence and machine learning to improve the insurance industry as a whole.
The insurance industry, which has long-been a more offline-oriented field that relied mostly on physical selling, has now been completely taken into the digital realm thanks to insurtech. Currently, in India alone, we have multiple fintech insurance companies with a fully digital footprint. Entities like Digit Insurance and Acko operate on a digital-first basis, with little to no physical presence.
The many ways in which fintech is transforming the insurance industry
The integration of technology in insurance has brought about a lot of advantages and has accelerated the growth of the industry. Some of the many ways through which fintech is transforming the industry are as below.
Every insurance policy requires you to pay premiums to enjoy the benefits offered by it. Have you ever wondered how insurance companies arrive at the premium to be charged for a particular insurance policy? It is done through the process of underwriting. Underwriting basically is the process through which an insurance company determines the level of risk that it takes and the amount that’s needed to offset the risk.
The underwriting process, till now, has been done manually. As a result, the process was time consuming and resource intensive. However, with fintech in insurance, artificial intelligence and machine learning are being deployed to make the underwriting process fully automated. Thanks to the elimination of human involvement, the underwriting process becomes more efficient and free from biases.
Faster application processes
The insurance application process is said to be complete only when the insurance company accords its approval. And this process usually took a few days to even weeks. However, thanks to fintech, the insurance approval process only takes a few hours. Many insurance companies have deployed algorithms powered by artificial intelligence that can not only increase the speed of approvals, but also help customers complete the process much faster. This has allowed the insurance industry to serve more customers simultaneously.
More accessible for younger customers
Millennials and younger customers are completely entrenched in the digital world. They prefer the convenience and easy access that digital-first initiatives bring about. And by integrating fintech and insurance, insurtech has made insurance products more appealing and accessible for this segment of the populace.
That’s not all. Considering the fact that younger customers are not known to be loyal to brands, insurtech is also helping retain customers by providing solutions that are tailor-made to their needs and requirements.
Accelerated and streamlined claims filing
Making an insurance claim is by far one of the most harrowing experiences for a customer. Till a few years earlier, the entire process was manual and involved filling out and submitting extensive paperwork. However, with fintech insurance, that’s not the case anymore.
In fact, many fintech insurance companies allow their customers to file online claims through their website or via their mobile smartphone applications. The claim filing process has been reduced from having to take days to merely a few minutes. And with the ever advancing nature of technology, the day is not far when insurance companies might even use data from smart devices and satellite imaging, among others, to make the claim process even more efficient.
Improved customer experience
The insurance industry was traditionally never known to be customer-friendly. A lot of the information dissemination happened through middlemen and agents, who used to not disclose all the material information needed to make an informed decision.
That said, thanks to the efforts of fintech insurance companies, the entire insurance industry is now more transparent than ever. That’s not all. Since the entire insurance process, right from applications to claims, are now fully digital, it gives a much better and a more streamlined experience to customers.
In addition to the above, fintech is also powering the customer support front as well by deploying chatbots powered by artificial intelligence. These AI chatbots are designed to understand and provide solutions to the queries raised by customers.
These are just a few of the many different ways through which fintech is revolutionizing the insurance industry. And as we move towards a more technologically oriented world, fintech is only likely to be more closely integrated with the insurance industry. Hope you’ve now seen how fintech and insurance work together to solve the needs of the industry. In the next chapter, we’ll see how the payments industry is being transformed as a result of fintech.
A quick recap
- Fintech and insurance, commonly dubbed as insurtech, is a burgeoning field that focuses on applying cutting-edge technology such as data analytics, artificial intelligence and machine learning to improve the insurance industry.
- With fintech in insurance, artificial intelligence and machine learning are being deployed to make the underwriting process fully automated.
- Fintech has reduced the insurance approval process from days to just a few hours.
- Insurtech has made insurance products more appealing and accessible for this segment of the populace.
- Many fintech insurance companies allow their customers to file online claims through their website or via their mobile smartphone applications.
- Thanks to the efforts of fintech insurance companies, the entire insurance industry is now more transparent than ever.
- Since the entire insurance process, right from applications to claims, are now fully digital, it gives a much better and a more streamlined experience to customers.
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