Last updated on November 28th, 2023 at 07:39 am
Have you ever tried to navigate your way through insurance claims? Despite numerous phone calls, emails and then some more chasing after the customer care executives - oftentimes all this hustle goes in vain. Lack of substantial response ends up generating lower customer satisfaction and an even more bitter experience, until technology swoops in and saves the day.
In today's fast-paced world, technology has been a disruptive force in almost every other industry. The insurance industry is not an exception. If you are looking forward to a career in fintech, knowing about insurtech is essential. In this blog, we shall try to understand how technology has penetrated the insurance market and explore the innovations that have impacted the industry altogether.
What is Insurtech?
As the word suggests, Insurtech is the technology designed to remodel the insurance industry to make it more customer-oriented and user-friendly. The term Insurtech comes from 'insurance' and 'technology' put together, inspired by Fintech (finance+technology). Insurtech now has effectively revolutionised the industry that once upon a time was made of tonnes of paperwork and some extremely tedious process of claim settlements. Along with that, insurtech has also come to ensure efficiency and cost-effectiveness while reducing errors and fraud with cutting-edge tools.
How so? Let us learn more.
Streamlined customer experience
Customer experience is one of the most crucial aspects of selling insurance. An improved customer experience is the catalyst of growth of the entire industry. But in the case of insurance, all the manual paperwork and process of claim settlement get quite cumbersome.
With the help of insurtech, one can easily purchase insurance policies online, have it customised based on their needs, submit claims simply with a tap of a finger and receive time-to-time updates on their mobile phones. Cloud computing and other technologies such as Artificial Intelligence and Machine Learning help in determining the amount of policy premiums based on the data provided by the customer. The digitised way not only makes buying insurance easier but also lets the customers navigate their way through the whole process with more convenience.
Advanced data analytics
Insurance is something that should be unique to individual customers. Every customer has their own set of needs and priorities. Insurance should be based on those essential points. Earlier, insurance used to have a set structure and customers had to buy a certain type of insurance to avail of specific benefits, all the while paying for things they did not need. Insurtech allows the much-needed customisations to insurance policies. With the help of artificial intelligence or AI, both insurers and customers can now analyse information to personalise packages.
Chatbots provide customer support to policyholders without the fuss of human interaction. Automation helps in designing an insurance policy that is solely fitted for the policyholder. For example, certain technical devices are installed nowadays in vehicles to collect data on driving behaviours. That data comes in handy in the future to calculate the amount of insurance premiums. Even wearable devices that can track various health metrics like heart rate, blood pressure, oxygen saturation in blood, and sleep patterns help design insurance policies for customers.
Blockchain and smart contracts
Blockchain is one of the pioneering technologies that has transformed the insurance industry for the better. Blockchain helps insurers create transparent and secure pathways for collecting and storing data of customers and their transactions. It also lets smart contracts automate the claim settlement process with more ease and efficiency. Smart contracts also come in handy in proceeding with the settlement after validating the claims of the policyholders. The execution of the entire process does not get started until the smart contract verifies the specific conditions that are to be met for the claim settlement. That is how this technology helps filter out potential fraudulent claims with finesse.
Internet of Things (IoT)
Internet of Things or IoT devices are the bridge between physical devices and software that analyse the data collected by them. Insurance providers heavily depend upon the real-time data collected by sensors and connected devices alike. For example, automobile insurers offer devices that gather data on vehicle conditions and driving patterns of the policyholder. The insurance premiums and the claim settlement amounts are decided based on those analytics. IoT devices are also capable of effectively identifying health hazards and contributing to the prevention of potential risk factors.
Pros of insurtech
Insurtech plays a pivotal role in filling the loopholes in traditional insurance policies with its new-age technological innovations. The reasons why customers these days are inclined towards opting for insurtech are:
- Insurtech enhances the customer experience by providing easy access to policy-related information. The innovative technology also helps them understand the nitty-gritty of the coverage. As the entire service is available online, the customers do not have to travel to certain offices to derive any information whatsoever.
- Insurtech focuses on the customisation of policies based on the needs of the policyholders. This technological trait makes the customers feel more comfortable with their investments.
- Insurtech improves seamless efficiency in the industry. Earlier, insurers and customers had to research a lot and explore a lot of options before deciding on a policy that fits their bill. Now, with the help of technological tools, both the insurer and customer can finalise their desired policy within a much lesser time, with more accurate projections.
- Insurtech ensures cost-effectiveness. Earlier, traditional insurance companies used to rely on manual labour and the miscellaneous cost would go up with no guaranteed outcome. Now with insurtech, companies engage staff remotely with almost no convenience cost and way more effective results.
- Insurtech promotes flexibility as the AI tools, chatbot and automation are available 24x7 to find resolutions to the queries of the policyholders and potential customers.
- Insurtech also accurately assesses the risk factors and provides optimised support in case of fraudulent activities.
Cons of Insurtech
Along with multiple pros, insurtech has a few cons as well:
- Technologies, no matter how advanced they might be, can sometimes be extremely confusing for new users. With all these new-age tools at their disposal, it can get incredibly overwhelming for technologically challenged customers.
- There also are nuances that are better explained by human agents than chatbots. Strictly online services can be limiting for all those enquiries.
Conclusion
The longstanding traditional insurance industry is now evolving rapidly with disruptive innovations like insurtech. Although insurtech is still at a nascent stage, it has revolutionised the insurance market with more certainty and sustainability. Insurtech has introduced a new way of looking at insurance policies and navigating through the nooks and corners of the industry. It has helped the customers with a more analytical approach and efficient yield. Some might say that the insurance industry is losing the human touch, but with its proven relevance, pace and responsiveness - it is safe to say that insurtech is here to stay.
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