In the amid Covid-19 pandemic, Insurance is one of the industries resilient enough to stand out in the
center of the storm. Life insurance being a product that requires human intervention to understand a
customer need has drastically changed as the implication of social distancing forced businesses to
switch from offline to online. Traditional company methods are being supplanted by technology, and
each industry is gradually moving toward digital to satisfy changing client expectations. Due to the
level of complexity and sensitivity involved in life insurance, it is still in the early phases of
digitalization. Traditionally, physical sales channels account for 80 % to 90 % of insurance sales.This implies that there is tremendous opportunity to explore the digital way of selling. Insurtech companies are hell-bent on reshaping the design and delivery of life insurance using new technology. The adoption of Insurtech will be able to boost consumer engagement, leverage analytics more effectively, and use mobile and social media for customer communication and transactions as a result of their use of Insurtech. As a result, an eco-system has been created in which customer experience, product development, and technology are all integrated.
The insurance industry is no exception, with new means of service supply
as well as more potential for data gathering and fraud detection that can lead to better risk assessment
and mitigation techniques, all of which are referred to as "Insurtech." Insurtech allow insurance
companies to develop more quickly than they do now. Their creative solutions significantly enhance insurance carriers' key processes; they eliminate the frictions that clients have while working with an
insurance company.
Insurtech: Dominating the new normal
Bringing together insurance companies and Insurtech pioneers will help insurers become more
relevant. It will bridge the gap between what customers want and what insurers can provide. They can
get whatever they need from the comfort of their own homes, and with so many alternatives to select
from, all based on cutting-edge technology, their trust worries have diminished. Insurtech is a term
that refers to the combination of insurance industry innovation and the creation of new concepts.
Certain characteristics, such as artificial intelligence and huge data customization, have made it safer
and easier to pick from a variety of possibilities. It's a handy tool for gathering and analysing
information for a big group of individuals. Customers love this innovative manner of delivering
insurance from the comfort of their own homes, and the processes are simple to comprehend.
Because Insurtech struggled to gain traction during early adoption, it split off from FinTech and
focused solely on the insurance industry to carve itself a niche. FinTech aided Insurtech by making it
more accessible to banks, NBFCs, and money managers.
Today, Insurtech is regarded as one of the most important factors in expanding insurance coverage
across the country and multiplying market penetration. Insurtech have risen to prominence in the
insurance industry in recent years. Investments have increased by leaps and bounds, from $140
million in 2011 to $270 million in 2013, and $2.7 billion in 2015. During the same time span, the
most successful Insurtech businesses progressed from seed to venture capital to advanced fundraising rounds. From $5 million in 2011 to $22 million in 2015, the average investment per Insurtech has
increased fivefold.
Early adoption of Insurtech
Despite the fact that the US was the pioneering market for Insurtech, a review of the firms' location of
incorporation from the Panorama Insurtech database indicates that just 46% of the companies are
currently located in the area, with another 40% situated in EMEA. Most Insurtech businesses are
based in the United States, the United Kingdom, and then Germany. Although the Asia-Pacific area
accounts for just 14% of Insurtech, it is predicted to develop at the quickest rate in the next years.
Insurtech are involved in all main insurance products and business lines, with a focus on property and
casualty insurance, as well as marketing and distribution.
For sales and service, almost all Insurtech use a digital user interface, but many Insurtech are also
adopting newer technologies and concepts that incumbents are only beginning to experiment with.
Insurtech are already using eight crucial new technologies that incumbents have yet to adopt to tackle
real-world business difficulties. Microinsurance, usage-based insurance, and peer-to-peer insurance
are examples of emerging technologies that especially enable insurance product innovation; others,
such as machine learning, robo-advisory, and the Internet of Things, have applicability across many
sectors. 75 percent of Insurtech focus on enabling distribution, which includes making items available
to clients at their leisure, allowing product comparison, and streamlining the purchase process.
What makes Insurtech differ from Incumbents:
Insurtech can approach the market in fundamentally different ways than traditional insurers. Insurtech
benefit from their independence from old goods, processes, and IT systems. They can create digital
processes, products, and systems from the ground up using cutting-edge technology. Insurtech, like
fintech, focus on certain value pools in the industry rather than attempting to deliver end-to-end
solutions. Less investment and faster profits result from simplified IT and operations. Insurtech take
advantage of their digital knowledge in a variety of ways that are typical of fully digital businesses.
Insurtech also exhibit a culture of next-generation entrepreneurship. Founders are frequently techsavvy entrepreneurs with prior expertise in software or insurance. They may take chances to test what
works and what doesn't since they aren't burdened by heavy operations and hefty investment needs.
They exemplify the mentality of a digital start-up culture, in which businesses emerge, fail, then
return in a transformed form, with the failure's lessons absorbed into a new strategy. They favour a
flat organisational structure, recruiting people who are passionate about the company's objective.
Insurtech can more readily make modifications and act on the newest experiences since there are few
if any layers separating personnel from top management.
Let us look at some of the innovations that will decrease the total time for the application process and
create a comfortable setting for the customers:
RPA and AI for core processes:
The automation of fundamental operations is critical because it aids in the processing of policies and
the fulfilment of client demands. To handle structured and unstructured data, RPA (Robotic process
automation) and AI operate together. Insurance chatbots powered by AI can assist customers in
chatting and conversing with their providers and receiving rapid answers to their questions. Insurtech
as a service must deal with massive amounts of data gathered from linked devices such as social
media and other sources, which may be readily automated. Because life insurance plans contain a lot
of paperwork, automation is a wonderful method to eliminate human errors and save time.
Predictive Analysis:
Predictive analysis is critical for analysing the demands of existing and future consumers. Life
insurance firms may employ actionable data to uncover historical as well as current patterns and
design their strategy appropriately. It aids in the creation of customised solutions based on client
feedback. This information is required by Insurtech consulting firms in order to provide meaningful
advice to their clients.
Smart Contracts:
The IT sector has been profoundly influenced by blockchain, and blockchain-based smart contracts
are a major change in automating life insurance policy claims. It is based on the decentralised ledger
idea, in which each client has their own copy of the ledger and may commit to a transaction
independently. Based on a set of pre-defined circumstances, the smart contract can be handled
automatically. It's a fantastic approach to boost operational efficiency and expedite claim processing.
Smart Contracts:
The IT sector has been profoundly influenced by blockchain, and blockchain-based smart contracts
are a major change in automating life insurance policy claims. It is based on the decentralised ledger
idea, in which each client has their own copy of the ledger and may commit to a transaction
independently. Based on a set of pre-defined circumstances, the smart contract can be handled
automatically. It's a fantastic approach to boost operational efficiency and expedite claim processing.
Advanced analytics for fraud prevention:
According to the studies, insurance firms lose at least 3% of their profits owing to fraudulent activity.
As a result, insurance firms are eager to take use of sophisticated analytics powered by AI in order to
provide a more trustworthy, dependable, and transparent experience for their clients. Customer data
from numerous sources, including as mobile devices and social media platforms, is regularly
evaluated and monitored for any abnormal behavioural trends.
Conclusion:
With the COVID-19 epidemic ushering in a new normal, insurance has risen to the front of
purchasers' minds, totally altering the value cycle. Both kinds of selling are clearly going to coexist
for many decades to come, and balancing the physical with the digital is the way to go. However, it's
worth noting that Insurtech has shown to be a viable alternative to traditional sales channels.
Contactless digital selling has built a trust factor with clients by assuring total transparency.
The sector of life insurance has just recently begun to evolve in terms of technological innovation.
The technological factors listed above will form the cornerstone of Insurtech innovation and will go
far beyond it in the future.