April 23, 2020 by Greg Meckbach
The COVID-19 pandemic is putting renewed emphasis on digitizing of insurance processes including payments, claims, applications and signatures, a Canadian fintech venture capital executive suggests.
“This is a good opportunity for fintech, because the acceleration of innovation in financial institutions is going to be even more prevalent,” said David Nault, co-founder and general partner of Luge Capital. “This whole COVID-19 is a digital reality check for financial institutions. This is when they are putting to the test what they have and what they need in order to have an end to end digital solution for customers.”
As for the impact on insurers and brokerages, there will be a push to digitize payment and billing processes – especially if the customers currently pay by cheque, said Laviva Mazhar, investment associate with Luge Capital, a venture capital fund with offices in Montreal and Toronto.
Among the recipients of funding from Luge Capital are insurtechs. The investors who ultimately provide the money to Luge Capital’s fintechs include Industrial Alliance, La Capitale, Sun Life and Desjardins, among others.
“This is actually accelerating their desire to innovate because there are issues that are surfacing now that all of a sudden become a priority,” Nault said of insurers and other financial services providers. “You are going to see acceleration in digital signature adoption and acceleration in the way in which they perform regulatory activities such as ‘know your customer.’”
In recent weeks, Nault has heard how insurers are changing their priorities as a result of the office closures and social distancing measures underway to reduce the risk of transmitting the COVID-19 virus.
“All of our carriers have told us that this is increasing the desire to work with fintechs that have solutions that are ready to address some of the challenges that have surfaced during COVID, so I think that is a very positive thing for the fintech ecosystem,” said Nault.
“This can be things like self-service tools – whether it using an app to do claims or whether it is getting information about your coverage.”
Nault has heard that in Canada’s financial services industry – including insurance – the digital interactions with customers are up about 400%.
“If you are seeing a wait time on a phone of 20 minutes you might be more compelled to go online to try and find those solutions,” reported Nault. “We are seeing a huge increase in the traffic for everything digital and carriers are trying to make sure the customer journey is the best possible”
For example, more clients are using online forms now to get insurance quotes.