Imagine a world where securing insurance is as seamless as sending a text. The global InsurTech market, projected to soar to $32.47 billion by 2029, is rapidly transforming this vision into reality. With an impressive growth rate of 30.34% from 2024 to 2029, InsurTech is reshaping the industry by reducing underwriting times, enhancing operational efficiencies, and tackling fraud head-on. The InsurTech market has been booming, especially with the power of APIs.
Let’s explore some key use cases for the integration of financial insights in insurance.
1. Seamless Financial Underwriting
In the insurance industry, underwriting plays a critical role in determining the risk associated with a customer. For products like term or life insurance, one of the key factors insurers assess is whether a customer is salaried. With account aggregators, insurers can directly fetch and analyse a customer’s bank statements. This allows for automated financial underwriting by checking salary deposits, savings patterns, and income consistency, leading to quicker approvals and more accurate risk profiling.
2. Premium Renewal Monitoring
Another significant challenge insurers face is ensuring that customers renew their policies on time. Missed payments can disrupt coverage, and reinstating lapsed policies often leads to delays in the process. Through the use of account aggregator frameworks, insurers can monitor customers’ accounts and set up automated reminders for upcoming renewal premiums.
For example, imagine that a policyholder has a term life insurance policy from a certain insurance company. The policyholder has an annual premium payment due on the 20th of January each year. By using the account aggregator system, the insurance company can monitor the customer’s account activity (with their consent) to check for available funds as the premium due date approaches. If the customer’s account shows insufficient funds or the payment hasn’t been made by the due date, the insurance company can trigger an automated reminder via SMS or email, informing the customer of the upcoming payment.
Leveraging this data, insurers can send targeted notifications when premiums are due, ensuring a smooth renewal process. Additionally, the same insights can be used to recommend optimal payment plans based on the customer’s financial health, further improving customer retention.
3. Enhancing KYC Processes
In motor and health insurance, KYC (Know Your Customer) is essential but can often involve time-consuming paperwork and in-person verification, slowing down the onboarding process. While IRDAI regulations do not permit using AA data to complete KYC directly, insurers can utilise it to pre-fill and validate user-provided information.This approach reduces manual verification efforts, speeds up KYC processing, and accelerates policy issuance.
4. Claims Reimbursement and Fraud Detection
Fraud is a major concern in insurance, particularly during claim reimbursements. Monitoring customer bank accounts for discrepancies or inconsistencies can help insurers detect fraudulent activity. For example, during health insurance claims, monitoring whether a customer has been hospitalised can be cross-verified with the account data fetched from AAs.
This cross-verification helps reduce fraud, accelerates claims processing, and ensures that legitimate claims are settled quickly, providing a seamless experience for the customer.
5. Personalised Product Recommendations
As insurers gather more data on customer financial behaviour, they can provide personalised recommendations for additional insurance products. By analysing a customer’s bank transactions, spending habits, and existing coverage, insurers can offer other tailored products that align with the customer’s financial goals.
As we look to the future, the ability to harness financial data will be critical for insurance companies aiming to deliver innovative products and enhance customer experiences. Solutions like NESH, built on the Account Aggregator framework, enable insurers to securely access and analyse customer financial data. By tapping into these insights, insurers can revolutionise their business processes.
Nikhil Kurhe, Co-Founder & CEO, Finarkein Analytics
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of IIA and IIA does not assume any responsibility or liability for the same.