How fintech is transforming the insurance industry
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Insurance technology attracted a record $15bn in funding in 2021, cementing itself as a big player in the fintech space.
Insuretech is set to transform almost every aspect of the industry, from quotes through to claims handling, with immense potential to offer customers a more flexible, tailored experience. Better still, insuretech tools can also help to streamline internal processes for insurers, minimising time-consuming admin and maximising profit margins.
Flexible and on-demand cover
The digitalisation of the insurance industry is most apparent in the increased flexibility available in insurance products. As well as purchasing cover online, customers can quickly make changes to their policies on-demand, reducing strain on call centres as well as providing a better overall customer experience.
Another fertile path for insuretech is on-demand insurance, allowing learner drivers to purchase coverage on a car owned by themselves or somebody else for just a few hours – perfect for those who only need to drive once or twice a week to practice, and for whom a full annual policy might be prohibitively expensive.
AI technology is transforming a huge variety of industries, offering the potential to streamline laborious manual processes and complete simple tasks without the need for human intervention.
While in some areas the use of AI is controversial – recruitment, for example, where AI CV screening services are under scrutiny for potentially introducing bias into the process – there are other areas where machine learning technologies can outperform even the most skilled human brains.
Insurance underwriting is one such area. With the ability to analyse huge datasets to identify trends and uncover new insights, AI is supporting insurers to increase efficiency and assess risk levels more effectively.
AI is also rapidly finding a home in other areas of insurance too, for example AI chatbots to answer simple customer queries and escalate more complex ones to the right team.
Embedded finance is the integration of banking systems into non-banking organisations – for example, the addition of “buy now pay later” or instant finance options on purchases, built directly into a retailer’s checkout process. Similarly, embedded insurance is on the rise, and is predicted to be worth over $700bn by 2030.
Embedded insurance can be highly visible, for example, offering cancellation coverage during event ticket purchases for an additional fee. However, the greatest potential for embedded insurance lies in more subtle applications. For example, insurance which is automatically bundled with short-term car hire or e-scooter rental means that consumers can simply rent their vehicle without the hassle of arranging separate coverage.
The insurance claims process can be a lengthy one, causing stress for customers as well as a drain on insurance companies’ profits through the large amount of manual work involved. It’s no surprise, then, that insuretech companies are targeting this part of the insurance process to make it more streamlined and efficient.
Claims processing is another area where artificial intelligence is coming to the fore. For simple claims, an AI-driven process can scrape data from documentation provided by a customer and, if it meets the required standard, process an instant payout.
This process not only saves significant resource time, freeing up claims assessors to focus on more complex cases, but can reduce instances of payouts being challenged or rejected. The faster an insurance claim is settled, the lower the likelihood that a customer will challenge the payout, and this can reduce the overall value of claims paid out, significantly increasing profit margins.
Make faster, easier insurance payouts with B4B Payments
With such a wide range of potential benefits, it’s easy to see why insurance firms are turning to technology to fuel their business growth. With B4B Payments’ end-to-end payment offering, we offer everything you need to build your own embedded finance offering, from flexible payment accounts through to instant payments on easy-to-use prepaid cards.
To find out more about B4B Payments’ services for insurers, get in touch today.