Tracing its origins back, go almost as far as the invention of commerce itself, the insurance industry has existed for millennia—and for any industry to survive that long, it has to adapt.
Today new trends and technologies develop more rapidly than ever before, making the need for adaptation more crucial than ever.
To continue providing the protection and peace of mind their customers need, insurance companies have to stay on top of the latest trends in both their own industry and the economy at large.
Let’s take a look at a few of the insurance industry trends that have already made a substantial impact, and will increasingly affect the industry over the next few years.
The use of Artificial Intelligence (AI) and automation
Many industries are on the cusp of a revolution thanks to advancements in Artificial Intelligence (AI) and computer automation, and these new technologies will have a substantial impact on the insurance industry as well.
An increased ability to both collect and process data will mean a better understanding of consumer behavior. When combined with AI’s advanced algorithms, insurance companies will have the ability to make behavioral economics the cornerstone of their business model, and craft policies and products that better match their customers’ behavior and protect the company against potential fraud.
Another area where AI can have a significant impact is in customer service and the management of claims. Some insurance companies are already using “virtual assistant” bots on their websites, which can not only answer customers’ questions on specific policies but even pay out claims in a matter of seconds.
AI is already changing the insurance industry and will have a major impact on everything from operations to customer experience as the technology continues to develop.
Advancements in technology will not just make the insurance industry more efficient, but also more personalized for the consumer.
As consumers become accustomed to increased personalization in other sectors and industries, they’ll begin to expect the same of their insurance coverage. Insurance companies will adapt by offering usage-based and on-demand insurance products that are more specifically tailored to the individual than the previous one-size-fits-all offerings.
Other forms of coverage options that have not been economically viable in the past will become more appealing, including micro-insurance, peer-to-peer insurance, and more flexible coverage options.
And as technology continues to allow for more data collection and better processing, insurance companies will increasingly be able to offer premiums that are more personalized to a specific customer and based on their individual level of risk.
With a large and ever-growing need for massive amounts of customer data processing, the insurance industry will need an efficient, quick and secure method of transferring data across organizations.
The same blockchain technology that’s currently used for cryptocurrencies like Bitcoin is a natural candidate for the industry’s data transferring needs. Blockchain is secure — which is why it’s been put to use in the financial industry — while still allowing multiple stakeholders to be able to access its data. This could allow the insurance industry to use blockchain for everything from identity and fraud management to claims processing and underwriting, all at operational costs that are lower than traditional methods.
The rise of insure-tech
Firms that specialize in introducing new technologies to the insurance industry, known as ‘Insuretech,’ have grown significantly over the past few years, and will continue to play a larger role in the industry in the near future.
As the technologies developed by Insuretech firms continue to disrupt the industry, traditional insurance companies will have to choose between acquiring these firms or partnering with them so they can leverage their technological advantages and implement them within their businesses.
The need for this technology will become increasingly important to insurance companies as they look to acquire millennials and the generations that follow them, who will increasingly expect advanced technological capabilities from their insurance provider.
In other industries, the rise of tech companies as led to a lot of disruption within the industry—just look at what Uber has done to the taxi industry. But in the insurance industry, there’s the opportunity for technology to be a plus for both the industry and its consumers. This can be seen as of late with new technologies such as My Proof of Insurance, which was recently introduced to Alberta. Insuretech firms can bring some much-needed technological advancement to traditional insurance companies, while older and more established companies can provide these firms with access to their well-established customer base.
The more data an insurance company has, the better and more efficiently it can serve its customers. And as mentioned above, increases in technology now provide insurance companies with much more data on their customers, which will allow companies to be more proactive and more personalized in their responses.
As both data collection and processing ability increase, insurance companies will have access to more advanced analytics that allows them to respond dynamically to a client’s specific needs, and provide them with coverage that’s tailored to their behaviours and optimized for them.
Staying Ahead of the Game
When companies — or even entire industries — fail to keep up with the rapid changes brought on by new technology and trends, it can spell disaster for both organizations and the customers they serve.
But by keeping abreast of the latest trends in the industry and the wider economy, insurance companies can adapt and improve their ability to protect their clients.
To learn more about the latest trends in the insurance industry, call Bow Valley Insurance at 1-800-332-1308 or contact us here.
Coverage is subject to policy wording, terms, conditions, and deductibles. Protection is limited to the perils, coverage, exclusions, and limits shown on the policy.