TOP 5 TRENDS IN THE INSURANCE INDUSTRY

TOP 5 TRENDS IN THE INSURANCE INDUSTRY

TOP 5 TRENDS IN THE INSURANCE INDUSTRY

New Models, Personalized Products

The digital economy will make usage-based, on-demand, and “all-in-one” insurance lifestyle solutions more important. Customers will prefer customized insurance coverage over the current one-size-fits-all options.

Today, more than 80% of the premiums collected by insurers are consumed by distribution costs. Digital models will make obsolete the too reliance on human labor displayed by intermediaries in the insurance value chain.

Variable coverage alternatives, peer-to-peer insurance, and microinsurance will all eventually turn out to be sensible choices. Digital brands will receive direct risk capital investment from reinsurers, and regulatory frameworks will permit shorter value chains.

The relationships between insurers and insureds will change as a result of lifestyle apps. It will be feasible to use Application Programming Interfaces (APIs), which mix data from many sources, to develop services that are driven by insights. A deeper comprehension of consumer behavior will result in more precise risk assessments, individualised premiums, and value on a long-term basis for improved customer satisfaction and brand loyalty, as well as fewer fraudulent claims.

AI & Automation for Faster Claims

Robotic process automation (RPA) and AI will become more prominent in the insurance sector as a result of the advancement of AI algorithms, enhanced data processing capabilities, and new data channels. For instance, Lemonade, an InsurTech company, bases its business strategy on AI and behavioural economics. While AI eliminates brokers and paperwork, it also reduces fraud thanks to its behavioural economics capabilities, saving time, money, and effort.

To accurately analyse the risks and boost profitability, Tyche, a distinct InsurTech startup, has integrated an AI-infused claim likelihood model into underwriting.

Robotic process automation (RPA) and AI will become more prominent in the insurance sector as a result of the advancement of AI algorithms, enhanced data processing capabilities, and new data channels. For instance, Lemonade, an InsurTech company, bases its business strategy on AI and behavioural economics. While AI eliminates brokers and paperwork, it also reduces fraud thanks to its behavioural economics capabilities, saving time, money, and effort.

To accurately analyse the risks and boost profitability, Tyche, a distinct InsurTech startup, has integrated an AI-infused claim likelihood model into underwriting.

Advanced Analytics & Proactiveness

Premiums will become more individualised with the usage of new tech-enabled data sources including the Internet of Things, mobile InsurTech apps, and wearables. Since the market for connected devices is anticipated to grow significantly over the next five years, Property and Casualty (P&C) insurers will be able to get trustworthy real-time data on the loss risk of specific clients. They will be able to respond proactively with quick, highly individualised therapy.

A good example is the partnership between a European insurance firm and Panasonic. The Panasonic sensors can provide smartphone notifications to the insurer and its customers to enable prompt and informed issue remediation.

As drone and imaging technology develops, insurance companies will be able to obtain high-definition pictures for distant and accurate property appraisals and analysis. Several of the nation’s leading car insurers employed drones to assess Hurricane Harvey’s damages. 90% of substantial loss claims were settled in only 90 days thanks to the use of drones by an Australian insurance company. 2

Links across data sets will also be used to get insights into how to improve individual risk profiles and protect insurers from new risk exposures. For instance, a U.K.-based insurance company employs predictive analytics to analyse complex consumer behaviour, increase price accuracy, and significantly shorten the time required for decision-making. In order to encourage safe driving, an American insurance employs telemetry technology to provide drivers with rapid feedback. The clients have saved up to 40% because of this.

Advanced analytics makes it possible to dynamically classify users and their needs, model behaviours and find exceptions, alter policy rates, improve business strategy, and identify new growth opportunities. Scale may be further included, and insurers can become proactive risk managers by using automation, AI, and machine learning.

InsurTech Partnerships

The auto, housing, and cyber insurance industries have all witnessed significant growth for insurtech companies. The conventional insurance industry will be encouraged to either invest in technology or work with insurtech companies by this rapid expansion. Given the millennial generation’s growing desire for cutting-edge products and services, such collaboration will become necessary.

Overall, it will be a win-win situation where established insurers will benefit from quicker results in establishing a tech culture and insurtech companies would have access to larger customer bases, capital, and industry knowledge. As a result, newer models and income streams will appear, boosting profitability and bringing down operating expenses. Customer experiences will be enhanced through value-added services.

Mainstreaming Blockchain

Various insurance operations must process large amounts of client data in real time, which needs easy and secure data transfer between firms and their numerous stakeholders.

Blockchain technology provides the advantage of secure data management across various interfaces and parties without integrity loss. From identity management and underwriting to claims processing, fraud monitoring, and constant data availability, the system offers lower operational costs across the board. The management of public policy can benefit from smart contracts and decentralised autonomous organisations (DAOs), two additional benefits of blockchain technology.

It’s noteworthy that the B3i project, which looks at blockchain applications in the insurance sector, has attracted the participation of more than 38 insurance and reinsurance companies. A blockchain-based insurance system is anticipated to launch its beta version in 2018.

The insurance industry has the ability to add new value worth billions of dollars in light of the aforementioned changes. The trick is knowing when and how to use both traditional and contemporary technology to capitalise on this potential.