The life insurance sector still remains open to change by fintech but has been less affected than other financial sectors due to its complex supply chain, claims a new report from platform provider netwealth.
The report stated the life insurance industry has only grown by 3.1% per annum globally in the past decade compared with other mature industries which have grown at 5% per annum and the complexity of the sector may be the reason for the lower growth.
The report also said that life insurers were starting to integrate technology into their business processes but were also looking at introducing it at a consumer level and pointed to the use of wearable devices to track and monitor a person’s health.
“the life insurance industry has only grown by 3.1% per annum globally in the past decade compared with other mature industries”
The report stated these were being used as part of well-being programs, such as AIA Vitality and MLC On Track, which provided policy discounts for policy holders who developed good health habits.
“In the future, we may even see insurers using technology to constantly analyse the real-time data received from these devices and using predictive analytics tools to engage with customers to indicate health patterns that are either harmful or beneficial to the insured person,” the report said.
“This may even lead to a model where insurance premiums change based on a person’s monitored health quality and lifestyle behaviours.”
According to the report, the collection of data through wearable devices and other technology will also allow life insurers to have more exacting data when pricing risks, rather than relying on surveys or official medical records to determine the health of a client prior to providing cover
“Technology now allows organisations to actually measure the precise health level of an individual. This data can be used in many ways for other health services providers, including insurance – theoretically, someone who has used a health monitoring service such as the one provided by AIA, could provide this data to prove their fitness and thus pay lower premiums on health insurance,” the report said.
“There’s no doubt that these innovations will disrupt other processes in hospital and medical and pharmaceutical practices from both a diagnostic and treatment basis. But for now, it is important for the wealth management industry to take note of the developments that are happening around them, and for planners to find ways to use these tools when advising on products such as insurance.”
Fintech could also change the way consumers applied for life insurance and how that application was handled during the underwriting process through the addition of third party data drawn from health databases, genealogy databases, the tax office, and artificial intelligence technologies.
“It is foreseeable that underwriting could be almost automatic, providing a quicker application experience and more tailored product for each individual customer,” the report said.
