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Lifestyle Insights for Underwriting in FinTech and InsurTech

Lifestyle Insights for Underwriting in FinTech and InsurTech
11 Dec 2020, 2 Min Read

Many assume Fintech is a recent development in the financial world. Believe it or not, modern FinTech was first introduced in the 1950s when the first credit cards came out and again in 1967 by Barclays with the first ATM. For decades, technology has played a critical role in the financial sector. One of the key innovations of FinTech is to aid lenders in more accurately determining the risk associated with each potential client in terms of being able to repay the debt promptly. More recently FinTech has begun using social media and lifestyle data to generate more accurate risk scores and persuade customers to repay loans faster with lower defaults.

InsurTech Adopts Innovative Risk Scoring Tools

The insurance industry is quickly following suit with multiple applications designed to improve the accuracy of underwriting. InsurTech disrupts the insurance landscape by improving customer experience, triaging customer to a product, and assessing underwriting risk. Let’s look at how these applications utilize lifestyle insights and social data points during the underwriting process.

The concept of FinTech is to use innovative technology to assess the risk of a potential borrower more accurately. InsurTech can take a page from FinTech’s decade-old book and apply it to customers looking for coverage. The benefits of using this technology are twofold. First, it allows for more accurate underwriting where premiums are better aligned with the risks carried. Secondly, you can offer better premiums to those who do not appear qualified based on traditional assessment methods but actually are. Without InsurTech, these clients would slip through the cracks and be unable to obtain coverage or have to pay higher than necessary premiums. This innovative technology harnesses automation and the power of digital footprints when evaluating a person’s lifestyle and social media.

What are Digital Footprints?

Browsing the internet is like leaving footprints in the snow. No matter how simple, the internet leaves a trace of everywhere you have been. This includes websites visited, registering on a webpage, shopping, social media uploads, and so much more. A person’s social media page leaves digital footprints differently. By design, a person shares a glimpse into their lifestyle by the posts they make, pictures they upload, pages they like, the groups they join, and the people they follow. Behavior can tell a great deal about whether a potential lifestyle best fit for a product.

Social Media’s Role in InsurTech

Getting to know someone aside from what they look like financially can give you a pretty good indication of their intentions. This is how InsurTech is following in the footsteps of FinTech by using social data points to triage insurance coverage and accurate premiums. Leading InsurTechs use Artificial Intelligence models and actuarial best practices to develop a rating based on lifestyle digital footprints. A selective variable may include the following parameters, among many others:

  • Behavior
  • BMI
  • Education Level
  • Employment
  • High-risk activity

Most importantly, the parameters and models are purposefully adjusted to meet regulatory requirements for discrimination and remove bias (e.g., race, zip code)

Progressive Lifestyle Insights

The insurance sector is quickly adopting lifestyle insights in underwriting by using an alternate pharmacy and credit scoring method to obtain a more comprehensive picture of someone’s well being. The next step is personalized experience is to gauge insights into lifestyle choices that more closely relate to the underwriting risk. This, in turn, leads to a higher level of customer engagement and expansion of coverage to those individuals who would have not otherwise received coverage based on traditional underwriting criteria.

Final Thoughts

Following the footsteps of FinTech, InsurTechquick adoptive innovative techniques in partnership with incumbent providers These applications use lifestyle insights, including alternative RX, credit scoring and social data points to triage customers and more accurately assess underwriting risk. The result is improved customer experience, expansion of insurance coverage and expansion of profit margins.

Ensuring your institution stays at the forefront of the industry requires utilizing technology that increases the accuracy of decisions and speeds up the underwriting process. Adopting InsurTechsolutions offers rapid deployment to drive improved customer experience, efficiency and underwriting margins.

Pilotbird empowers teams to score risk better, prequalify and engage customers. Our lifestyle analytics allow your company to engage the right customers at the right time. Ready to see how our solutions improve your business? Learn more by requesting a FREE Demo.

Mani Kaur is an industry thought leader in the insurance industry with numerous articles on technology, innovation, and financial services.

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