What happens when the tradition of insurance combines with cutting-edge technology? That is right, the result is called Insurtech. Being a subdivision of fintech, what this new business model offers is high levels of flexibility and personalization for end-customers as well as considerable cost savings and process efficiency for the providers. Just as nothing is entirely black or white, there are some pros and cons that need to be considered when it comes to what exactly insurtech consists of and what its applications and limitations are.
From my experience working in a bespoke software development company, I am now fully aware that new and innovative technologies are so valuable for the improvement of our daily lives in the digital era we live in. Especially during a pandemic, when physical contacts should be restricted, we almost solely rely on technology to manage our day-to-day errands. Insurance has always been a sensitive topic as people want both reliable insurance partners and new innovative offers to fit their changing needs. That is why in this article, we will explore the advantages and disadvantages of insurtech-related solutions.
Pros: Why to Adopt Insurtech?
Firstly, we will dive into the pros to discover how insurtech brings value to both insurers and policyholders. Some of the main focus areas of insurtech are growth and reduced acquisition expenses. This is achieved primarily when insurtechs look for gaps to fill e.g unsaturated and untapped markets of unmet needs by industry incumbents. The use of artificial intelligence (AI) and machine learning (ML), drones or blockchain technology, which offer full automation and high connectivity is what insurtechs can hope to disrupt the traditional insurance with.