INSURTECH

 

INSURTECH

                                         AN INNOVATION IN INSURANCE

INDIA, a flexible country, has been adapting to all kinds of changes in all sectors to date and will surely continue to adapt to the new changes that are to be introduced in the coming days. Here, the word ‘days’ is mentioned not ‘years. This indicated that the world is facing new changes every new day. To keep pace with the modern world, every country must accept the new changes. one of these changes is the introduction of the latest technology in every field. Right from a small-scale industry to a large-scale industry adapts the latest technology. technology is not only being adopted in the manufacturing sector but also in the service sector. In fact, the use of technology in the service sector is more than used in the manufacturing sector. The service sector comprises of hospitals, educational institutions, IT, insurance, etc. This blog focuses on the introduction of the latest technology in insurance which is given by the term ‘INSURTECH’ i.e., insurance and technology just as the term ‘FINTECH’ which is finance and technology.                                                             

INSURANCE

Insurance has become a prominent industry in the service sector. No one can predict the future. There can be good or bad. Every human being expects good, when there is something bad, we wish it to become good. This is what an insurance industry does, it minimizes the risk in the future, it cannot be said that it completely covers the risk, but it can cover a major part of the risk, just as a bird in hand is better than two in the bush.

The insurance company charges a certain amount for covering the loss, which is called a premium. the premium is determined based on the risk involved i.e., it depends upon the policy taken by the customer. for example, if a customer takes a life insurance policy, the premium is charged based on the customer’s age, health, occupation, and lifestyle, etc. These factors determine the rate of premium i.e. it can be higher or lower. To charge the premium in the best possible way new technology is trending in the insurance industry which is ‘INSURTECH’.

INSURTECH

Right from the time we wake up to the time we sleep, technology plays an important role in our lives. With the help of technology, the world is in our hands. If we want to do shopping, we can do it online. We can buy clothes, vegetables, groceries, furniture, etc. through online. But when it comes to policies like an insurance policy, we directly go to the insurance company and enquire about it or we consult an insurance advisor. This is because we take utmost care regarding purchasing a policy, about the premium, its other benefits, etc. insurance plays an important role in a business environment as the conditions of a business are uncertain. Since the business conditions of a country contribute to its growth, it is necessary to reduce its risks. A businessman may not be able to find time to visit an insurance company or consult an insurance advisor in his busy schedule. Insurtech helps businessmen to find a suitable policy they need online from anywhere which is time-saving.

Insurtech, in brief, uses technology for predicting risks i.e., by using various tech devices such as GPS tracking of cars, apps in smartphones, etc. to price premiums, accordingly, having easy access to insurance policies which are different from traditional insurance practices. In traditional practices, insurers must analyse the risk by using various methods, tools, etc. which are rigid and time-consuming, and yet the results are not accurate. Whereas the use of technology can give the appropriate results. For example, if a person has taken travel insurance, the risk can be analysed by using tracking devices which is not possible in the traditional insurance industry.

Need for insurtech

As innovation is key to the growth of a business, every business must accept the changes, insurtech leads to multidimensional expansion of insurance industry. As a result, insurance industry can provide the best possible results. There are many insurtech start-up companies across the world. The US holds many insurtech companies while in other countries like India, the insurtech companies are slowly taking pace. A sum of 4.5 trillion-dollar insurance industry has been affected by 101 insurtech start-ups from various countries like America, India, etc. the advantage of these insurtech companies is that they can provide employment to many youngsters as the youngsters are the major users of technology. As the insurtech start-ups are now being considered small-scale industries, it might give a boost to other small-scale industries that even they can revolutionize their respective industries just as the insurtech is doing. In a country like India which is slowly being transformed into a digital India, there is a great scope and need for these start-ups.

In the modern world, a major proportion of the population is becoming tech-friendly. Therefore, these start-ups lead to greater customer satisfaction. These start-ups also require less paperwork and the cost of infrastructure etc. is also less. These start-ups can play an important role in the development of developing countries.

 

Challenges

The first and foremost challenge that insurtech start-ups are facing is ‘reluctance to change’. The big giant insurance industries are reluctant to adopt the latest technology as it involves many regulations, especially in a country like India. The insurance industries are facing difficulties in complying with the regulations that are posed by the governments for insurance start-ups. The availability of funds is another challenge. As these start-ups are being started by new technology programmers that may not have enough capital. The fear of losses in big insurance industries is one of the reasons why start-ups are not being easily accepted.

Solutions

The adaptation of technology is very important for every person in the modern world. Without the adaptation of technology, we can’t imagine our lives, just like in today’s world we can’t imagine our life without a smartphone, a transport vehicle, computers, etc. which are possible just because of technology. These industries may replace the insurance industry in the future, without which we may not imagine our lives. This will be possible only when we adopt the latest technology i.e., the giant insurance industries should welcome the new start-ups and the governments should encourage them. Governments should provide support to these start-ups through various schemes in countries like India which are developing, as these start-ups can give a boost to the development of the country.

Here, I want to quote an example of ‘survival of the fittest. Which says the thing which adapts to the changing environment will survive and the rest will die. Similarly, the insurance industries must adopt new inventions like insurance which will revolutionize the industry.

                     

                                                                                                                           BY

                                                                                                                           Y. JHANSI