At this stage, I’m sure you’ve heard both FinTech and InsurTech being mentioned across the industry, online and in multiple articles. FinTech stands for Financial Technology and refers to the technology which has transformed the financial services sector over the past number of years. Last year, InsurTech made its way into the industry. And as you’ve probably guessed, it is the application of technology to traditional insurance practices. But, are these merely buzzwords?
I mean technology has been transforming multiple sectors across the globe forever. Looking back as far as the industrial revolution, the introduction of steam power and the rotary engine transformed many industries. Distribution by steam train and ships improved product transportation, and faster rotary movement increased industrial production, without human power. Today, electricity and gas have transformed this industry even further.
So, although FinTech and InsureTech may be defined as buzzwords, they do represent a growing trend across the globe. For example, the financial sector is so different today, compared to five years ago. Today, my bank allows me to sign into my account using my smartphone. I can view my account balance, transfer money to other national and international accounts, pay bills, apply for a loan or call my local branch right from within their application.
Automated Teller Machines (ATMs) have also transformed in recent years. Last month, I needed to deposit a check into my account. Normally to do this, I would need to figure out how to make it to the local bank branch, which is only open during regular working hours, around my working hours. That usually meant having to join the hectic lunchtime queue. But when visiting the local supermarket, I discovered a newly installed ATM. The ATM allowed me to deposit my check using my debit card. If that isn’t satisfying the need for the modern consumer I don’t know what is!
The financial sector still seems to advance more quickly than the insurance industry, but InsurTech is beginning to change the insurance landscape dramatically.
I recently submitted a claim under my health claims policy. The entire process was straightforward, easy, and done right from my computer. And even better the payment was transferred directly into my bank account. Compared to three years ago when I would have had to fill in paper forms, scan paper receipts, and send this off by post to my insurance company. I would have received the payment by check, which would take a few days to clear through my bank. This would be after I had found the time to go to my local bank branch and deposit the payment check.
Some insurers have mobile applications, with similar functionality, making it even easier to do this on your mobile device from anywhere. Best of all, these positive customer experiences improve the relationship between the consumer and these institutions. Whether we like it or not, technology improves the entire claims process and reduces the claim duration.
Unfortunately, legacy systems, which are common in the insurance industry, often hinder innovation in this industry. Modern technology is essential to allowing the use of mobile applications and electronic upload of documentation. Cloud-based technology and centralized databases ensure data transfers smoothly between multiple devices.