COVID-19’s turbulence and upheaval have underlined the value of resilience in many businesses. Unpredictable occurrences and mass uncertainty were felt deeply in the insurance industry, which has always been based on measurable risk assessment.
As a result, the insurance landscape has become irregular, with rising demand for some insurance categories – such as event cancellation – and substantially reduced demand for others, such as travel. It did, however, provide a much-needed impetus for insurers to innovate.
According to Gartner, 87 percent of insurance CIOs expect to use digital channels to reach clients more frequently in 2020. Insurance was being re-invented prior to the pandemic to keep up with changing consumer behaviours, demands, and expectations.
Looking ahead, there are no signs of this slowing down, as continued digital transformation allows the industry to keep up until 2025 and beyond.
Aside from InsurTechs’ rapid expansion, technologies like Artificial Intelligence (AI), Machine Learning (ML), and cloud computing will give the industry new analytical capabilities. This will result in significant changes in distribution, underwriting, pricing, and claims, as well as new opportunities for data modernization, predictive analytics, and improved client engagement.
Customers accustomed to Amazon’s, Google’s, and Uber’s digital responsiveness and convenience will soon expect the same seamless experience from insurers. However, as the decade progresses, they’ll expect additional layers of security, ethics, and well-being, even as insurers develop next-generation experiences that re-define customer engagement.
Depending on the type of insurance, such events will manifest in various ways. Customers in the future, for example, will expect autonomous vehicles to automatically reduce pay-as-you-go premiums by checking the safest routes. The same vehicles will assess damage and file claims in the event of an accident. Wearables will enable consumers to track their own health in order to save money, and travel insurance will react in real time to a person’s location data.
The technologies that will make these future scenarios a reality already exist, and with IDC forecasting that by 2025, connected devices will number over 56 billion and generate 73.1 zettabytes of data, there will be plenty of opportunity for next-generation experiences. 2 Insurers may design experiences that successfully disrupt and re-define the sector by implementing such capabilities early and wisely.
In today’s world, seamless experiences are expected. However, insurers will need to build digital ecosystems that go beyond present silos in order to fully leverage the power of data-driven decision-making and analytics. As a result, insurers will merge various types of insurance over the next five years. For example, pet and personal health insurance may become linked, with wearables measuring activity and both lowering prices when a consumer takes their dog for a walk.
One business insurance company in the United States has already built a digital network that brings together goods and services for its construction customers in one location. The connected ecosystem’s goal is to encourage clients to use cutting-edge technology that help manage risks, improve business outcomes, and, ultimately, enable personalised insurance solutions.
Ecosystems are also beginning to expand to meet the needs of customers. Route, for example, is a real-time visual package tracking tool that allows customers to monitor and track numerous orders. Users can add insurance to their orders through the service, which is backed by Lloyd’s of London, for just 1% of the item’s cost. For two billion consumers who buy products online, the most common query is, ‘Where is my stuff?
For a better customer experience, more insurers and disruptors will develop transparent data-driven digital ecosystems in the future. Data will be transferred safely and securely across enterprises and industries thanks to open-source protocols and distributed ledger technology like blockchain.
Companies exchanging data will reshape the insurance value chain by increasing operational efficiency, lowering costs, and driving innovation. Building the long-term connections required to actualize this future will entail ensuring security and compliance.
Customers will value such assurances, and their trust in insurers’ ability to protect their personal information will be critical. According to a recent study, the majority of worldwide consumers (55%) trust financial service providers with their personal data, making them the most trustworthy of the major sectors evaluated, ahead of hospitals, governments, and technology businesses, but there is still space for improvement.
Consumers’ expectations for companies to help them achieve their health and wellness goals will see insurer-customer ties deepen based on trust. By 2025, the ‘promise to pay’ will give way to a ‘promise to help.’ This could be a progression in health insurance from paying to cure to supporting proactive prevention measures like better exercise or diet. It may be able to assist car insurance clients in lowering their carbon footprint by providing incentives for them to use electric vehicles.
It might be health and safety suggestions or posture monitoring at work for employer insurance. During COVID-19, an Italian insurer launched an app to enable its customers access health services. Meanwhile, a company located in Switzerland has developed an app to assist new parents. It was created in collaboration with a digital start-up and employs artificial intelligence to recognise a baby’s scream and translate it into one of five fundamental demand levels.
Both of these cases demonstrate how innovation is being used to protect consumers outside the scope of standard insurance policies. More insurers will target different groups – such as families or retirees – with bespoke insurance policies, goods, and services tailored to their needs as a result of this concern for consumers’ health and well-being.
For insurance companies themselves, digital transformation will ensure that they not only survive, but also prosper, in the face of looming uncertainty. This will not be accomplished solely through technology; businesses will need to strike a mix of skill and infrastructure.
They’ll require cultures that encourage digital literacy and data democratization5 via self-service analytics. 6 As a result, they will be able to empower their staff to make more confident decisions that will lead to corporate growth and a competitive advantage. As a result, more simplified services will improve both staff satisfaction and customer experience.
One example is a tech-focused home insurance provider. Its use of machine learning extends beyond customer service to underwrite risks and manage claims, empowering staff and freeing up time for them to focus on the high-value components of their jobs.