Financial technology, or 'fintech' as it is
more commonly referred to, is taking the financial industry around
the world by storm. Over the past ten years, there has been a
significant increase in the use of technology in the financial
sector, spanning from mobile banking, small business lending, and
financial advice. However, despite the financial innovation and
technological progress made so far, a large part of the financial
industry is still relatively unaffected.
The insurance sector is one of the areas where the growth of
fintech is still lagging behind. This is not to say that progress
has not been made. In fact, despite the heavily-regulated nature of
the insurance industry, and the considerable expenses involved in
infiltrating the market, we are slowly starting to see an
ever-increasing presence of fintech in the realm of insurance.
As predicted, the more traditional classes of insurance, such as
health, life, property, vehicle and marine insurance have been the
first to take the leap into using technology as a method to
underwrite risks. Some start-up companies around the world are
already providing insurance products at the push of a button.
Eventually, most insurance policies will be delivered on mobile
phones and other devices.
Technology can also provide valuable information when it comes
to underwriting risks. Smart watches and fitness trackers can
provide insurers with accurate data for making health assessments
so that insurers may no longer need to rely on the declarations
made by the insured before purchasing a life or health policy. The
reliance on the element of 'utmost good faith' on
the part of the insured could eventually become obsolete, and could
be replaced by hard-facts obtained through the use of smart
technology. Similarly, tracking devices on automobiles or mobile
phones can be used to assess an insured person's driving habits
and to adjust premium costs accordingly.
Technology has also brought new types of risks to the fore, such
as cyber crime and hacking. One of the latest challenges faced by
insurers is the rise in popularity of remotely piloted aircraft (or
drones). Insurers all over the world are still trying to work out
how to deal with the rise in demand of third party insurance cover
for these types of aircraft.
Going forward, the necessity for developments and innovation
will continue to increase and the insurance industry will
eventually have no choice but to accommodate the prospect of using
technology in order to satisfy the demand and aptitudes of the
Ultimately, once regulatory hurdles have been overcome,
technology will provide endless possibilities to the insurance
industry and to the consumer. The foreseeable advantages include: a
better understanding of client aptitudes through personalised
underwriting, increased cost-efficiency and client satisfaction
through the use of alternative communications, increased and
improved client-insurer interaction, ease of access to insurance
policies, and the ability to align insurance products with
demographics and in-app data.
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