10. Sneak peak into the future of insurance: fintech and disruptions

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A sneak peek into the future of insurance: fintech and disruptions

Automation can reduce the cost of a claims journey by as much as 30%

According to Accenture, global funding for insurtech companies has been on a rise. It jumped from 4.4 billion with closing 410 deals in 2018 to $6.8 billion closing 476 deals in 2019.

It has an entirely digital experience involving next-generation virtual brokers. Their aim is to not to talk to a human agent at a call centre rather it is to close policies online.

These experiences have evolved with time. They have tailored products according to the need of each and every different individual with easy and quick access. They have made insurance shopping not only easier but cheaper too. 

Scenario 1:

Anil just became a parent. He decides to upgrade his insurance plan now. He visits an insurtech’s website and explores all options. He was able to buy a 30-year level-premium term life insurance policy online in just 15 minutes, without a medical exam.

Scenario 2:

Anil now plans to buy car insurance as well. While browsing he considers a plan that will charge him each month based on miles driven. It will be tracked via an app. 

Scenario 3:

Anil’s brother, Shyam is moving to a new city. Shyam plans to get an apartment on rent. Anil suggests buying renters insurance. Shyam checks out a website and gets renters insurance in seconds.

Scenario 4:

Shyam plans to start his own business in the new city of making handmade lamps. He checks out possible insurance policies he can get for his business and discovers gig workers can get business insurance coverage on the spot.

Disrupting the future of the insurance industry

Traditional agents and brokers are at danger of being paused.  The business models that depend on them are at risk.  The underwriting and pricing systems are increasingly automated and a critical mass of consumers systematise coverage on their terms. Knowledge awareness is a significant factor, as the internet is at everybody's fingertips, especially mobile phones. These when combined with distribution portals, enable consumers to buy basic and complex products, such as airline tickets, automobiles etc. online without interference an intermediary.

The insurance industry is disrupted by the rise of fintech, advanced technologies, and changing consumer behaviour. 

Technology startups and Insurtechs are continually redefining customer experiences. They have gotten pretty innovative. These are the few services they offer regularly, risk-free underwriting, on-the-spot purchasing, activation, and claims processing.

The report from Deloitte Global examines forces that are disrupting the insurance industry and presents four possible scenarios for the future. 

  • Changing the channel: Partnerships with product makers and distributors, and embedding insurance into other products and services may enable customers to select products that best fit their lifestyle.
  • Underwriting by machine: Technology advancements including artificial intelligence innovations and algorithms will likely individualize risk selection and pricing, and customers can select products based on a wider range of price points.
  • Rise of the flexible product: Time-flexible, event-driven, modular, and adjustable coverage may evolve to accommodate life stage, lifestyle, and wellness changes among consumers. 
  • E-Z life insurance: Given the growth and shopping patterns in emerging markets, insurers who introduce flexible term products and master digital distribution without compromising underwriting, are likely to win in the marketplace.

Leading companies are using data and analytics not only to improve their core operations but to launch entirely new business models. A large incumbent could more than double profits over 5 years by digitizing existing business.

Insurance companies with the most advanced management practices related to digital

strategy, capabilities, culture, and organization outperform their peers. Yet relatively few incumbents have so far defined a comprehensive digital strategy—the foundation from which

all else logically follows if they are to compete in a digital world. Instead, they package together tactical or incremental initiatives that individually drive modest performance improvement—some digital marketing, a new sales channel, or some degree of automation, perhaps— while leaving significant value potential untapped and their futures in doubt

WRAPPING UP!

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A Quick Recap

The increase of fintech, ever-changing consumer behaviour, and advancement in technologies are interrupting the insurance industry.  Insurtechs and technology startups proceed to redefine customer experience via innovations like on-the-spot purchasing, activation, risk-free underwriting, and claims processing.

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