This March, The Fintech Times is shifting its spotlight towards insurtech, exploring how fintech solutions are being utilised to enhance financial inclusion and bridge the gap in underserved regions.
As insurers strive to meet the evolving needs of a digitally-savvy customer base while addressing the persistent challenge of financial inclusion, they are increasingly turning to fintech solutions.
These innovative technologies not only enable insurers to streamline operations and enhance customer experiences but also play a pivotal role in extending financial services to underserved communities.
Let’s delve into how industry observers say insurers are leveraging fintech solutions to bridge the digital divide and enhance financial inclusion.
Tailored options
Janthana Kaenprakhamroy, CEO and founder of insurtech Tapoly, addresses how insurers are offering tailored digital insurance options, innovative distribution channels, and advanced technology solutions.
“Insurers are increasingly turning to insurtech solutions to address the challenge of closing the protection gap and promoting financial inclusion, especially in underserved regions. By leveraging fintech innovations, insurers can bridge the digital divide and extend insurance services to populations with limited access.
“These solutions enhance accessibility by providing digital insurance options tailored to the needs of underserved communities. Insurtech enables insurers to offer simplified and cost-effective insurance products, making them more accessible to individuals who were previously excluded from traditional insurance markets.
“Additionally, insurtech facilitates innovative distribution channels and advanced technology solutions, ensuring that insurance products reach remote and marginalised populations. Overall, the integration of insurtech in the insurance sector is instrumental in narrowing the protection gap and promoting financial inclusivity on a global scale.”
Making inroads
Technology simplifies insurance, aiding inclusion, particularly in underserved regions, with embedded products enhancing accessibility and family wellbeing, says Darran Simons, head of insurance, EMEA at data analytics company FICO.
“Insurance policies and products can often be complex, high-touch, and very time consuming. Insurers can leverage technology solutions to both design and offer products that are easier to understand and to purchase. For example, a property policy may have historically required physical inspections, but now that same information might be available directly from public or private third party databases.
“Similarly, there might be enough application and public information available on applications for some types of life or health insurance that may not require time-consuming medical testing. By identifying the kinds of policies that can make a difference in underserved regions, and then utilising the technologies, platforms and analytics that are available in the marketplace today, insurers can make bigger inroads into inclusion across all socio-economic groups.
“We are also seeing this leveraged with the increase of embedded insurers products making insurance more accessible in some regions, and aiding typical demographics that might previously forego vital protection products to support the wellbeing of them and their families.”
Flood risk
Bob Schiller, director of product innovation at insurer SageSure addresses the significant gap in flood insurance coverage by highlighting the role of data in accurately assessing flood risk and facilitating insurers’ adaptation to evolving risks.
“For flood insurance specifically, the gap between the number of homeowners exposed to some level of flood risk and the number of homeowners who have flood insurance is vast. To date, only five per cent of homes in the US and 30 per cent of homes in FEMA-designated high-risk flood zones have flood coverage even though 99 per cent of US counties are impacted by flooding. Recent studies have shown that compared to FEMA estimates, there are 1.7 times more properties that have substantial flood risk.
“Data can support efforts to assess flood risk more accurately, especially as the risk itself continues to evolve. As data increases insurers’ ability to adapt to changes in risk, and as models are updated on a much more frequent basis, decision-makers throughout the insurance value chain are better positioned to educate consumers and connect them to solutions that address their home’s exposure.
“Many insurers are developing competitively priced private flood insurance products that leverage the latest advances in flood risk modeling, which will continue to support efforts to increase flood coverage take up and close the protection gap.”
Harnessing technology
Rob Bauer, group chief MGA officer at international insurtech bolttech, says technology is critical to closing the protection gap, which Swiss Re quantifies at $1.8trillion up from $1.3trillion, just a few years earlier.
“We’re beyond refrigerators telling owners that a critical part is about to fail, or the warranty needs an update. In the developing world, mobile phones can self-diagnose screen damage, and activate a repair network with little human intervention.
“Life insurers are using inputs from wearable technology like Apple Watches to alter mortality tables, which drives precision-pricing and risk selection. For example, if technology can show an individual has run five miles, each under eight minutes, three days a week for the last three months … do you need a comprehensive medical exam?
“Insurers are figuring out how to use the tsunami of data at their fingertips, and make it meaningful to better risk-select, underwrite, and price.”
Brokerage strategies
David Embry, CEO and founder of insurance broker Mylo, says: “Many small businesses and individual customers have traditionally gone unserved because agencies can’t efficiently grow their own businesses and process a high volume of these often complex transactions.
“Technology is changing this equation – providing an easy and cost-effective way to analyse customer needs quickly, streamline the underwriting process, match needs with carrier appetites and more.
“We have been able to scale while giving underserved customers the personalised guidance and expert solutions they need. Our insurance intelligence engine efficiently analyses data, makes expert coverage recommendations, and matches needs with personalised solutions from more than 100 leading carriers.”
Influence of gen AI
Elad Tsur, a serial entrepreneur specialising in machine learning, big data, and AI, is the CEO and co-founder of Planck, an AI based data platform for commercial insurance. He foresees a substantial decrease in insurance premiums, driven by the widespread adoption of GenAI.
“I believe GenAI adoption is going to dramatically impact overall loss ratios. It will improve loss models and play a huge role in driving down insurance costs.
“And I foresee a significant decrease in premiums, not just one to two per cent. In time, by more accurately assessing risk and pricing insurance, we can make it more affordable and bring access to more underserved businesses and consumers.”
