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In recent years fintech innovations and technologies have reshaped the provision of financial services and it continues to do so. It has created new opportunities as well as posed new challenges for the insurance industry. Since the emergence of fintech the insurance industry is undergoing a systematic change in its business operations. Fintech developments in the insurance sector have impacted the insurance sector greatly. The surge of fintech diversity in customer behaviors and advanced technologies has impacted the insurance industry. It is essential to be pointed out that Insurance (Insur-tech) and other technology start-ups work continuously to redefine and upgrade the customer experience.
Fintech is a combination of two words- “Financial and Technology”. It applies to any emerging technology that provides the customers or financial institutions to deliver financial services in a new and faster way compared to the traditional model.
Fintech is beneficial in a way that it allows a person to make quick lending decision, allows the investor to do research, choose stocks and check their portfolio performance in real-time. Fintech developments have caused a massive change in the way companies do business.
Fintech development pertains to the different emerging technologies and business models that have played a vital role in the transformation of the insurance sector and it is still transforming.
These developments in the insurance sector are specified below.
The innovations in the insurance industries can be attributed to technological growth and the evolving expectations of the customers. The creators of these innovations are incumbent insurance companies and new technology firms or companies called insur-tech.
The innovations in fintech has the potential to cause significant benefits such as-
It must be noted that the innovations may also have a negative effect on consumers and may affect the financial stability of the insurance markets.
Hence in order to identify the impact of these innovations in fintech, the IAIS (International Association of Insurance supervisors) reviewed the following potential scenarios that can disrupt the insurance business models.
These above-mentioned scenarios were analyzed and the main findings from it are specified in brief below.
The fintech industry is growing day by day and the growth is sustainable. In the operations of large scale sectors insurance businesses have been caught lingering in meeting the capabilities for the sets of people but the fintech has been assisting the insurance industry in this. It is assisting in making a strong insurance industry that has the capacity to innovate and operate with sustainability.
By partnering with Insur-tech enterprises, the insurers can offer the following:
Fintech developments can be disruptive and can have a critical impact on the insurance market but it is a very uncertain area now to assess and analyze the extent to which these developments or innovations would affect the insurance market and its supervision.
Also, read: Steps Taken by RBI to Develop Fintech