Top 5 Defining Trends in the Insurance Industry
The insurance industry has been undergoing a digital transformation for years, but it has hit warp speed to adopt a technological shift to address the unprecedented challenges brought about by the pandemic.
The change has been so sudden and dramatic that it’s unclear if the insurance industry will ever return back to the way it previously operated.
Technology has been the most dominant force that has turned the insurance industry on its head. And that’s not a bad thing either; if you’ve done your homework and embraced the change. According to an Accenture report, insurers that rely on intelligent solutions are able to earn ten-fold returns on their investments.
With this interesting backstory in mind, here are 5 trends that have emerged in the insurance industry.
1. Low-Cost Premiums Due to Tailored Products
Modern-day insurance products are driven by big data, which allows them to become more flexible, tailored, and customised. In the past, insurers were skeptical about leveraging technology but things have steadily changed as millennials grow into the biggest population group. To capture this tech-savvy group and stay ahead of the curve, insurers are capitalising on technologies such as blockchain, cloud, and IoT.
Commercial insurers are also taking note since millennials are now well into the apex of their careers and hold crucial decision-making powers. Millennial executives often bring their consumer expectations and mindset into their companies.
2. The Use of Telematics in the Automobile Industry
Telematics refers to devices that merge information technology with telecommunication. Auto insurers rely on telematics to retrieve policyholder information in real-time through data transfer. One common case of telematics is to monitor driving behaviour, track mileage, and assess car conditions. This data is then used to generate a detailed risk profile to calculate rates accordingly.
3. Cloud Computing
Cloud computing has been on the fast track of growth for several years. 2021, however, has seen cloud computing become a dominating force that has become more essential than ever before.
In particular, Software as a Service (SaaS) sits alongside an agile IT model to create applications and software that will allow brokers to engage the new generation of customers in the increasingly tech-driven market of 2021 and beyond.
4. Extended Reality
Insurers are exploring a variety of applications for VR, MR, and AR (together known as extended reality or XR) to expand their opportunities and bolster operations. Extended reality is still in the early days, but it has the potential to turn the insurance industry on its head.
XR can make data-gathering easier for investigators by allowing them to assess risk profiles using a 3D image without ever having to visit a site themselves.
More importantly, XR can be used to train a new generation of insurers in virtual settings. In this new virtual environment, investigators can prepare for various possibilities and create an informed risk profile.
Blockchain technology provides multiple stakeholders and interfaces the opportunity to secure data without loss of integrity. From underwriting and identity management to fraud management and claims processing, blockchain can bring about unparalleled cost savings.
An additional benefit of blockchain is the use of Decentralised Autonomous Organisations (DAOs) and smart contracts in the area of policy management.
All the above trends will disrupt the insurance industry for the better and generate new value worth several billions of Pounds in the years to come. The key is to understand how to tap into the potential of emerging technologies.
Writen by: Donna Pastor on 2021-04-28
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