How FinTech has impacted Insurance Industry
The term “FinTech” has been a boom presently and you probably have heard this term. It’s Financial Technology. Fintech innovations are reshaping the financial services. There is one branch of Fintech called “InsureTech” which refers to the variety of emerging technologies and innovative business models that have the potential to transform the insurance business.
There have been many fintech innovations already being utilized in the finance sector., the most relevant innovations in the insurance sector are technologies like digital platforms, the Internet of Things (IoT), telematics, AI (Artificial Intelligence), distributed ledger technologies like blockchain.
Now, let’s see the potential impact of all these fintech innovations on the insurance business.
Firstly, there are some potential advantages of fintech innovations like cost reduction, improved efficiency, and risk management, greater customer service experience and financial inclusion.
The report from the International Association of Insurance Supervisors (IAIS) underlines the potential impact of Fintech on the insurance sector. To identify this impact, IAIS examined the below three scenarios:
- Incumbent successfully maintain their customer relationships.
- The fragmentation of the insurance value chain due to new technology-enabled players enter the market.
- Big tech companies are overtaking incumbent and traditional insurers.
This report also highlighted some challenges for the insurance regulators(supervisors) as:
- Supervisors need to balance the risks and benefits of innovations. Also, they need to create an environment that fosters innovation through various approaches like regulatory sandboxes.
- Supervisors need to comprehend how innovations work and are applied in order to assess the risks rising by a new business model or products.
- Supervisors need to consider the adequacy of current reporting requirements for monitoring trends and the potential build-up of risks attached to new technologies.
In short, the established incumbents in the insurance industry have been challenged by insurtech, but overall, they have not ignored this challenge. They have started taking steps to adapt to the new landscape and most importantly, create win-win situations for themselves and their customers. Are you looking for any Fintech Application Development company? NBL is a leading Fintech application development company.
