While the pandemic has served as a driving force for many sectors to join in the use of digital services, Insurtech can take most of the credit for the innovation of the insurance sector. The growing demand for insurance service digitization is the driving force behind insurance innovation.
Many people are unfamiliar with what insurtech truly is and how it can benefit insurance. Inspired by the term fintech, Insurtech is a combination of the terms “insurance” and “technology.” With the ability for people to save money and the process to be more efficient through technological insurance, Insurtech is a game-changer. Some examples would be the creation of chatbots and smartphone apps.
The pandemic did in fact cause people to use their insurance less, but it did not lower the value that it had; People still had a greater desire for medical, life, and home insurance. The desire to go digital is a result of insurers wanting to offer a wide variety of products to consumers, pleasing them as much as possible. Being able to provide the customer with what they are looking for, in the form they are looking for it in, is crucial.
Insurtech providers are more interested in what the effects of the pandemic will be long term. The insurance sector is a bit different from others in that the slight change in how consumers used their healthcare because of the pandemic is not enough for them to overreact to long term
The volatility that COVID introduced is something to consider. If it turns into a long-term shift in utilization rates for consumers and the volatility level does not lower, insurers could be forced to implement large-scale changes to insurance premiums and pricing.
There are other changes that the industry will make that are not related to raising or lowering premiums. Looking at the short-term effects, there is the possibility of the creation of different types of coverage and pandemic-related policies. It will be interesting to see what the sector comes up with to promote insurtech in the following months.
Insurance is one of the more recent sectors to be technologically innovative. With this level of success, it is easy to say that the industry has reached new heights. In 2020, the global market was at $1462.3 million; It is projected to rise to $11940 million by 2027, according to PR Newswire, all due to the growing demand from consumers for more digitized services.
PYMNTS.com. “InsurTech, Not Pandemic, Drives Insurance Innovation.” PYMNTS.com, 16 July 2021, www.pymnts.com/insurance/2021/insurtech-not-the-pandemic-drives-insurance-innovation/.