What is Insurtech and How is it Different from Fintech?

Manali Mehrishi

7th Dec'22
What is Insurtech and How is it Different from Fintech? | OpenGrowth

Insurtech is a combination of insurance and technology. It refers to technological innovations designed to bring efficiency to conventional insurance models. It aims to disrupt the insurance industry by venturing into super-customized policies and data-enabled devices to price premiums according to monitored behavior.

The Fintech industry has revolutionized the world of finance with technological innovations. Now people can make payments from their phones, check their bank balance, and even invest in stocks through an app.  Fintech has implemented technological innovations across all financial services like banking, taxation, lending, cryptocurrency, investments, etc. The industry has also benefited by streamlining and automating rigorous tasks. The success of these innovations has paved the way for Insurtech to explore similar avenues.

Both fintech and insurtech offer easy access, flexible options, personalized products, and efficient customer service. But due to market regulations and risk involved in financial sectors, it becomes quite complicated to ascertain these two terms.

Read on to find out the difference between Fintech and Insurtech, their challenges, and their prospects.



What is the difference between Fintech and Insurtech?

 

Goals

Fintech

  • The goal of Fintech is to transform traditional methods of accessing finance by creating ease, transparency, and accuracy through digitalization. 

  • Fintech aims to remodel all financial services like mobile banking, crypto, and investment portfolios.

  • It also aims to create customized services for tech-savvy millennials and gen z that are available.

 

Inurtech

  • The goal of insurtech is to transform the insurance industry using the latest technology to detect fraud, execute contracts automatically, evaluate risk, underwrite policies, and manage claims.

  • Insurtech will analyze data using internet-enabled gadgets like GPS trackers, and smartwatches so that nobody has to pay more than they should. It aims to create ease, accessibility, and transparency.

What is the difference between Fintech and Insurtech

Challenges

 

Fintech

  • Since financial transactions involve large amounts of sensitive data such as credit card numbers, income information, and personal IDs, the risk becomes higher due to data theft and fraud. 

  • Strict government regulations and huge capital costs make it difficult to enter the fintech industry for startups. 

 

Inurtech

  • Legal and regulatory frameworks vary based on location and are frequently modified. It makes it difficult for the insurtech to follow a standardized approach. 

  • Insurance deals with managing risks, any wrong calculations can hurt the organization and the consumer.

  • Conventional insurance companies are still the big players as most people prefer the “personal touch” Unless insurtech startups merge with large corporations, it will be an uphill battle to stay in the game.


 

Prospects

 

Fintech

  • Although the world has embraced digital transformation in the financial sector, Fintechs are constantly improving and innovating new modes of transacting. 

  • Refinements in AI and machine learning will enable organizations to match their products with their customers immediately, eliminating long waiting periods and laborious work. 

  • With the reduction of administrative labor, products will become more affordable, that's one way in which Fintech has played a big role in financial inclusion.

  • Decentralization of global payments and alternative credit reporting is also possible soon.

 

Insurtech

 

  • Like the west, India will see a rise in embedded devices in cars, fitness trackers, and smartwatches to monitor and perform personalized risk assessments. 

  • The underwriting process will become fully automated. 

  • Calculating premiums will become faster and more accurate. 

  • Claim history across all insurance companies will be accessible to prevent fraud. 

  • Affordable and uncomplicated plans with an option to make weekly, monthly, or quarterly payments will be available at the click of a button.


 

Technologies used

 

Fintech uses a combination of AI, big data, blockchain, crowdfunding platforms, virtual currencies, robot advisors, and apps for investment and stock trading. 

Chatbots, machine learning, virtual agents, risk management apps, and digitized paper records are some of the technologies adopted by Insurtech.

What is the difference between Fintech and Insurtech

Does fintech include insurtech?

Just like the insurance sector is a division of the finance industry, Insurtech is a sub-division of Fintech. But many experts state that since insurance is an enormous sector to cover, Insurtech must be considered a separate industry.

Being a regulated industry, Insurtechs have functioned with the partnership of fintech and large insurance companies to drive innovations in the insurance sector. People can buy insurance, settle claims and pay premiums from their phones. Insurtech is gradually catching up to the fintech industry as it strives to offer personalized, affordable, and flexible insurance services compared to traditional insurance firms.


Conclusion

Insurtech and Fintech have common goals like creating value-added services, changing conventional models, automating rigorous human work, and providing excellent customer service. The difference between fintech and insurtech lies in their scope, market regulations, and challenges.

The pandemic also fueled the need for digital financial services. Fintech made money management and customer service efficient. Whereas insurtech-enabled Customer profiling, automated payments, and accurate risk analysis.

Fintech has proved to be a success in financial services. Insurtech is still testing the waters and has a long way to go before it revolutionizes the insurance industry.

 

We at OpenGrowth, are committed to keeping you updated with the best content on the latest trendy topics from any major field. Also, both your feedback and suggestions are valuable to us. So, do share them in the comment section below.

 

Manali is a versatile content writer with experience in creating compelling blog posts, website copies, and content strategies across several industries. She is committed to delivering top-notch content that meets both her readers' expectations and her clients' standards. Outside of work, she enjoys traveling, baking, and acquiring new knowledge and skills.

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