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How COVID-19 Impacted the Future of Insurtech
Looking ahead, insurance regulators should be more likely to allow more significant technical advancement and use in the insurance industry since, during the pandemic, many innovations were allowed and successfully used.
FREMONT, CA: The key goal of Insurtech's innovation was to improve customer experience and help policyholders adjust to an increasingly digital environment. However, innovation has been constrained by some existing state insurance laws and regulations, which have in many cases been enacted to regulate the sale and management of insurance products before the introduction of modern communication devices.
With the continuing COVID-19 pandemic, U.S. insurance regulators had to encourage practices and improvements to the way insurance business is done to promote the procurement, sale, and administration of insurance where it has become difficult to conduct business as usual with lockdowns and other restrictions.
Given COVID-19's transformative impact on social and business experiences, the coronavirus pandemic has caused increased urgency for legal and regulatory changes. As a result, it has become necessary for commercial and consumer insurance to use creative forms of subscribing and administering claims, such as using drones to assess the loss.
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State insurance regulators have carried out numerous emergency actions to facilitate the transaction of insurance undertakings remotely. Several states have allowed and encouraged insurers to use electronic communications with policyholders during the emergency lockdown procedures. And with limits on physical contact, states have advocated for the use of remote and online technology to examine and modify allegations.
The pandemic has made much clearer, from the insurance sector's point of view, the need for the whole industry to embrace major technological advancement and shift into every aspect of how insurance is transacted.
Also, insurance customers will benefit from the trend toward greater incorporation of insurtech into the insurance industry and will undoubtedly want to see it continue. While the use of insurtech so far has centered mainly on the customer and small and medium-sized business sectors of the insurance industry, the uptake of insurtech technologies would probably broaden to include all facets of the future commercial market.
The pandemic has the ability to promote the acceptance of insurtech technologies and lead to long-sought legal and regulatory reforms and subsequent social and business changes. The benefits of several of the insurtech proponents' positions over the past few years have become more evident. Especially about the need to amend several insurance laws and regulations that no longer serve their purpose as most insurance transactions are increasingly taking place online and remotely. Based on lessons learned during the pandemic, the case for making the much needed changes to the insurance laws and regulations of the states to encourage innovation will remain high in the future.