A short glimpse on challenges and opportunities of life insurance business reveals why FinTech will find a target in life insurance industry.
Life business nowadays has to deal with several challenges on several levels. On macro level the advancing individualism of consumers, the low interest rate environment in combination with higher regulation fuels the need for innovations and more flexible processes, products and services. Although interest rates are low and guarantees are quite expensive, retail clients are still in favour of guarantees. On company level topics such as capital efficiency, a step-in of risk management, de-risking of products and reduction of guarantees, complex processes and expensive administration represent a huge obstacle for any innovation. In fact, new business tends to stagnate or decrease these days. On a micro level the complexity of modern products and their complex and extensive documentation complicate sales process, a further circumstance that doesn’t accelerate new business at all.
The current situation requires from a life insurance company a vigorous change in acting and thinking.
In this conflict situation FinTech steps into the market. From technical perspective they are able to touch directly the core processes of life insurance companies: issue and administration of policies as well as all related financial processes as for example in accounting and asset management. An automation and flexibilization relating to product development will allow a much shorter time to market and foremost, it allows totally new, flexible and individual products and related services. FinTech is able to trigger a revolution in life insurance business that will even change the sales process. The FinTech movement is a big opportunity for a life insurance company, provided that a company is conscious about that.
However, FinTech will enter this market not for free or for any charitable reasons but because this market has a deep and increasing need for saving and retirement solutions. This need presents a huge business opportunity. FinTech is capable of creating a win-win-win situation because retail clients will benefit from this irresistible movement too. Clients will be served quicker, more flexible and more transparent. Or to put it in a nutshell: simply better than today.
FinTech in life insurance isn’t science fiction any more.
FinTech can revolutionize processes and organisation of a life insurance company. FinTech is able to allow product innovations that will develop new growth areas and a real client centric product development. The sales process will be more web-based but will allow human-interaction as much as the client needs and demands for. One of the upcoming cooperation may even bring out a disruptive innovation that will lift life insurance business to the next level. FinTech in life insurance isn’t just science fiction any more. A successful and sustainable cooperation is close to be realized and the next (r)evolution in life insurance business has already begun.