Disclosures may be more robust soon1 min read . Updated: 09 Nov 2020, 09:15 AM IST
- Insurers should partner with fintech companies to transparently communicate policy-related information
Fintech startups that are decoding insurance products for individuals could help to make products more transparent and provide better disclosures, according to top executives of life insurance companies speaking at Mint Money Conversation presented by digibank by DBS that was held on 4 November.
“There was a time when total disclosures were not happening. Subsequently, now we have a situation where even if an insurer doesn’t disclose, there are people who can calculate returns (IRR) and inform the buyer. That is already in vogue. Many software professionals are doing that work and it’s impacting a lot of sales," said P. Muraleedharan, executive director, LIC.
According to him, insurers should partner with such fintech companies to transparently communicate policy-related information.
At present, the mandatory disclosures that insurance companies offer are not adequate for buyers to understand products entirely. While fintech companies cannot offer such disclosures as insurers closely hold such data, the startups are using artificial intelligence and machine learning to gather better quality data and calculate returns.
Life insurance company executives believe that with time insurers will disclose more data. “Yes, we can certainly move the needle on transparency and disclosures. The regulator looks at some of these aspects but we can do more," said Vibha Padalkar, managing director and CEO, HDFC Life Insurance Co. Ltd.
She added that customers need to be more proactive in terms of researching an insurance product like they would find out about a gadget.
Executives said the entry of fintech firms in the insurance segment is an opportunity. “These new ecosystems are about engaging with customers the way they want. We like the customer-centric part of fintech. There could be a symbiotic relationship between them and insurers," said Padalkar.
As more customers turn to fintech companies for buying insurance policies due to better disclosure and transparency, insurers, too, plan to move in tandem with the changing trend and help customers take an informed buying decision.
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