Consumer behavior is constantly changing. We now expect to be able to access and apply for services digitally and on mobile devices. The banking sector has responded to these consumer behavior changes, using technological advancements to create fintech innovations such as mobile payments, ‘paywave’ and online applications. But the insurance industry has not kept pace with their banking peers and with many Asian insurance companies tied into the banking sector through bancassurance deals, we can now see the insurtech revolution taking place there.
What is Insurtech?
Insurtech at its simplest level means technology supporting the insurance sector. Recently insurtech has been pushing the sector to enhance customer experiences, create cost savings and drive process efficiency, particularly in areas like digitization, paperless distribution, and data analytics. Insurtech platforms designed specifically for the insurance industry’s needs have allowed the creation of bespoke products, for example:
- Insurance policies in South East Asia are typically sold by agents, who build personal networks through family and friends to convert sales. In an early example of digital disruption, AIA gave tablets to their agents, so sales could be converted in ‘real time’ without the agent having to return to the office to process paper applications.
- A more advanced step is digitizing the advised experience through an application sharing onboarding processes. The adviser kick-starts the application, then shares the online wizard with customers to complete the product selection and quote, e-underwriting and ID verification. This saves significant administration time and (more importantly) frees agents up to focus more energy on customers.
- A newly arrived licensed life insurance provider has revolutionized the industry by allowing applicants to obtain a life insurance policy in minutes online, through any device. They use facial recognition technology for identification, electronic underwriting for real-time pricing and approvals and digital signatures for contract execution: this is truly a remarkable shift from a previously cumbersome on-boarding process involving manual applications and paper-based forms.
It’s exciting to see what will be next in the pipeline — particularly in the field of artificial intelligence, where consumers will be able to get responses to personal queries in real time.
It’s clear that a digital sales proposition is an essential strategy for insurance providers, preferably with an end-to-end fintech investment platform to bring a seamless operation.
In today’s digital age, especially in the insurance industry, you will notice that the market has changed; the speed at which we do things matters much more. The most fundamental component in developing an insurtech startup or business is the ability to move quickly.
If you are an insurtech startup like us here at Inmediate, you need to focus on building the best customer experience you can and implement that as quickly and effectively as possible. Another important factor is the ability to change the way to operate — consistently and regularly — which can help you to keep your business on the edge.
The Impact Of Insurtech
Insurance innovation is having a pronounced effect in Asia. A large, technology savvy population welcome digital contact solutions, sweeping away the geographical barriers of the traditional local agent-based engagement model. This disruption has also brought real benefits to consumers:
- Direct, paperless sales channels lower costs, creating lower premiums. For example, a new digitally based life insurance provider offers a $400k life policy for a male 30-year-old non-smoker for an annual premium of $217, compared to an industry average of $305.
- Enhanced data analytics allow greater profiling and tailored, customized products (and as data analytics have always underpinned premium costs, technology and data should improve calculations and lower premiums too).
- Mobile and digital channels are more convenient for customers unable to meet face-to-face in traditional business hours.
- Mobile penetration rates in Singapore (mobile subscriptions over total population) have trebled from 47.6% in 2000 to nearly 150% in 2017.
- Consumers can share relevant data using innovative technology like wearable fitness devices which upload to insurance apps, creating even more opportunities to tailor products and reduce premiums.
While the technological revolution in insurance may have taken its time to arrive, we now see real benefits for consumers with lower prices and improved products and services. Insurtech advancements are also creating great opportunities for new and existing insurers — as long as they are willing to seize them.