What impact has the global pandemic had on Insurtech?
The current pandemic has consumers and companies facing issues that were previously unanticipated. Insurtech is well-positioned to provide necessary services in these changing times. Here are just a few of the current trends in Insurtech.
On-Demand Insurance
The current pandemic has everyone thinking “What’s coming next?” and “What can I do to prepare?” On-demand insurance, or insurance only for the particular need at a moment in time, has gained significantly in popularity. Many automobile owners with cars sitting idle during the pandemic are looking to change their insurance coverage to save money. According to The Globe and Mail, Sun Life Financial and TD Insurance have reported spikes in online sales of products, especially with the under-40 demographic. Having easy access to insurance from a phone has on-demand insurance products well-positioned to serve the current needs of customers.
The Internet of Things
Stay-at-home orders have resulted in a surge of sales of fitness products, including wearable technology. Information obtained by wearable technology such as FitBit products and Apple Watches can yield valuable data for Insurtech. However, Insurtech has to remain aware of legislation in Canada that governs how this data can be used. There are significant privacy consideration, and regulators are taking a closer look at the uses of data. When Google announced it was purchasing Fitbit in 2019, the news was met with resistance by some FitBit users fearful of what Google would do with their personal data. Recently, the European Commission required Google to commit that FitBit data would not be made available to Google ads and also decided to launch a full investigation into the deal. Australia has also launched an investigation. For Insurtech, there is potentially unlimited use for data obtained from wearables. However, companies should be aware that data is governed by privacy laws and legal review of any uses in connection with this data is important.
Financial Inclusion
Financial inclusion is founded on the principle of having financial services accessible to all. The World Bank set a Universal Financial Access (UFA) goal that, by 2020, would see all adults with access to a bank account globally to help reduce poverty and boost shared prosperity. The results of the UFA goal will not be available until 2021, but early estimates by the Center for Financial Inclusion suggest there is long way to go. Having every citizen with access to mainstream savings programs, insurance products, and credit and investment products is important for both personal financial security and a healthy economy. The UFA goal has a strong focus on developing countries, yet a significant number of Canadians remain without access to important financial services, such as affordable and accessible insurance. Canadian banks spent a great deal of effort to introduce online banking to customers who used brick and mortar locations in order to serve them during the lock-down. Increased access to insurance products and services for new demographics of consumers will open up opportunities for consumers and for Insurtech to better serve all Canadians.
Insurance laws in Canada are stringent and complex and can be difficult to navigate. Insurtech vendors need to be aware of the legal and policy implications of the programs they provide their clients. An understanding of the legal and policy framework around Insurtech products and services as well as legal review early on in the process is important. Compliance issues should be addressed as soon as possible before changes become costly.