4 Major Trends for the Insurance Industry in 2020 and Beyond
A new year. A new decade. The world is changing and so is insurance – which is something that business owners should keep up to date with to ensure that their operation is properly protected.
In our latest blog, we take a look at some of the major trends impacting the insurance industry in 2020 and beyond, and offer some key insights that owners of SMEs should be aware of.
The Growth of Insurtech
The biggest shake up of the insurance industry has got to be the rise in insurtech. Insurers are being pushed to digitise, developing new and better ways of working for the ever changing technological landscape. Funding for insurtech has increased by two thirds in the US and more than tripled in Asia.
Here are a few of the technical trends set to disrupt our industry this year…
Mobile Functionality
In the UK, 94% of adults own a smartphone. Most of us manage the vast majority of our day to day lives on our phones. So, it seems justified that we expect our insurance to be mobile friendly, too. Over three quarters of insurance companies now offer apps for customers to manage their policies.
Companies need to pay attention to modern mobile and web trends, refreshing their apps and mobile sites to provide an appealing, easy to use interface. If not, users will bounce over to another provider faster than you can say …
Predictive Analytics
When it comes to customer information, insurers now have a greater pool of data than ever before. Beyond standard customer demographics, companies can now access credit history information, social media behaviour and even your shopping habits. Predictive analytics can use this data to create actionable insights for insurers. Providing better, more precise solutions for customers.
Predictive analytics can be used to optimise pricing strategies, accurately determine risk, anticipate emerging trends and even identify possible fraud.
AI & Automation
The old is out. The new is in. Insurers can no longer rely on outdated and inefficient legacy systems.
Automation offers insurers a new way to develop their services to better serve clients. By taking care of repetitive, resource intensive tasks such as data processing, AI can help insurers deliver a more personalised customer experience. Not to mention a faster turnaround for claims and underwriting. With the ability to sort through scores of data in a flash, machine learning algorithms can offer greater insights for more tailored policies and better, more affordable coverage.
Internet of Things (IoT)
Over the years, smart tech has made its way into our homes and looks set to stay. Insurers are now using data from our smart devices and wearable tech to help assess risk. Thus allowing them to better determine insurance rates. As well as offering ways to prevent losses. Customers who agree to their insurer accessing this data will receive personalised advice on risk management, plus tailored coverage and pricing.
Insurers are increasingly viewing their customers as individuals, with individual risk and coverage requirements. IoT devices can help insurers provide a more personalised, holistic service to individuals.
One insurance company provides its customers with toothbrushes to track how well they look after their teeth, using the data to provide cheaper dental insurance plans. While others use information from wearable tech like Fitbits, to tailor life insurance policies.
Emerging trends are often accompanied by emerging risks. The risks of data breach and cyber threats is on the rise and it is up to insurers to come up with creative solutions to address these risks for their clients.
Recruiting Fresh Talent
The insurance industry is facing a talent gap of increasing proportions. Graduates and Millennials are choosing more ‘dynamic’ career sectors such as tech, consulting and finance over insurance. With tens of thousands of insurance professionals retiring each day, the need for fresh faced talent in the industry is every more prominent.
Insurance companies will need to look towards more modern career values if they hope to attract younger professionals. Values such as opportunities for advancement, work life balance, flexibility, company culture, benefits and diversity are all key considerations for younger workers.
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Environmental Issues
2019 saw its share of devastating natural disasters. From wildfires raging across California, Australia and the Amazon rainforest. To typhoons in Japan, the Philippines and China. Growing concerns over extreme weather events and other natural disasters have motivated insurance companies to take action.
Companies have put in place measures to help reduce the risk of injury and property damage, as well as liability in such instances. Insurers have updated their risk assessment models to respond to the concerns and have been proactive in advancing their mitigative efforts.
Other firms have helped by raising awareness, offering education and incentivisation for stakeholders and communities. Helping them to invest in preventative measures to mitigate risk.
This is also important in regards to attracting new business, as customers are becoming increasingly more environmentally and socially conscious in their brand choices.
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Changing Buying Behaviour
We live in an age of immense choice. Buyers want everything now. In the last decade, buying behaviours have changed. Insurance firms need to keep up with the Millennial demand and emerging trends.
By 2025, Millennials are expected to make up 50% of the buying market. And their buying habits are drastically different from their predecessors.
For example, Millennials are delaying asset ownership in favour of a sharing model. Rideshares, living with parents for longer periods and preferring to spend on experiences such as travel, concerts and festivals.
Studies demonstrate that the Millennial generation show preference for usage based insurance products, product bundles and insurance that is on demand. They are also more willing than older generations to try new products and innovations from startups.
Today’s buyers are increasingly looking for simplicity, transparency and speed in their buying interactions. Insurance companies need to keep up, or they’ll miss out.
