Why Insurance Isn’t Broken—It’s Built for Trust, Not Virality. A response to fintech’s oversimplified critique of insurance

In a recent article, a fintech founder described insurance as “unnecessarily complicated” and accused underwriters of changing the rules too often. While such statements may earn applause in tech circles, they miss the fundamental point: insurance is not a convenience product. It’s a long-term, fiduciary commitment that can’t—and shouldn’t—be “disrupted” with the same recklessness that has defined much of fintech’s rapid rise.

This isn’t just an ideological debate. History, regulation, and recent events have shown us what happens when insurance and financial services are stripped of rigor in the name of accessibility. The results are devastating—not just for balance sheets, but for real people who trusted the system to protect them when it mattered most.

1. Why Insurance Is (and Must Be) Complicated

Insurance isn’t a two-click transaction. It’s a promise—sometimes for decades—to show up when a customer’s world has turned upside down. That promise requires judgment, prudence, and modeling of rare but catastrophic events.

Yes, underwriting evolves. But that’s not a sign of chaos—it’s a sign of maturity. Underwriting responds to emerging risks, changing epidemiological data, climate trends, and health cost inflation. The alternative is underpricing risk, misallocating capital, and failing customers when claims are filed. If we treat underwriting like app settings, we’re not building insurance—we're building denial factories.

2. History Already Taught Us This Lesson

India’s Pre-Nationalization Chaos (Life Insurance)

Before the nationalization of life insurance in 1956, India saw over 240 insurance companies competing in a loosely regulated market. Many were poorly capitalized, mismanaged, or fraudulent. Policies were mis-sold, premiums vanished, and claims went unpaid. It took the collapse of companies like Jupiter General Insurance and the Great Eastern Life Assurance Co. for the government to step in and say: this isn’t a business—it’s a trust.

UK & Australia’s Product Misfires

In the 1990s and 2000s, the UK and Australia faced crises in payment protection insurance (PPI) and income protection products, respectively. Products were mis-sold en masse, underwriting was paper-thin, and consumers were left with coverage that didn’t cover. The result?

• Billions in compensation.
• Regulatory overhaul.
• Crippling trust deficit.

3. Fintech’s Loose Underwriting: Déjà Vu in Lending

Let’s not forget how fintech's overzealous algorithms in India’s unsecured lending space created a wave of micro-loans with near-zero underwriting. Millions of consumers are trapped in debt spirals, with harassment, privacy violations, and suicides following. Now, similar voices want to extend that playbook to insurance? That’s not innovation—it’s ignorance, wrapped in UX.

4. What Actually Needs to Change (and How)

Insurance can evolve—but within its moral boundaries. Here’s where true innovation can happen:

Reimagine Product Design

• Expand spectrum of protection cover.
• Introduce well-priced parametric products for weather, income disruption, or hospitalization events.
• Bundle with preventive care or wellness—not just as gimmicks, but as engagement models that truly reduce risk.

Leverage Ecosystems Responsibly

• Health insurance should evolve to integrate verified health data, wearable insights, and digitized health records with user consent.

Rebuild Trust through Transparency

• Use technology to demystify exclusions, premium hikes, and claim decisions.
• Let users simulate scenarios of what their coverage actually does in case of real-life events.

5. You Can’t Build a Fiduciary Institution Like a Viral App

Insurance should not be the next F&O trading app. It shouldn’t addict users into risky bets disguised as empowerment. In fact, the damage caused by equity derivatives today—where young Indians are losing life savings to leveraged trades—is a perfect case for why some industries must remain slow, thoughtful, and yes, complex.

You don’t earn trust by disrupting it. You earn it by protecting it—year after year, claim after claim.

In Closing

The next time someone says “insurance is too complicated,” ask them this: “Compared to what? A loan app that vanished with your data? Or a protection product that was there when you needed it most?”

Complexity isn't the enemy. Misplaced simplicity is. Let’s build insurance that is intelligent, inclusive, and interoperable—but never irresponsible.