Trends That Drive Disruption in the Insurance Industry
The world of business is full of examples of consequences when companies fail to keep up with emerging technologies and trends, from Kodak failing to keep up with the digital revolution of the photography industry to Nokia quickly dropping from the ranks as the world’s leading mobile phone manufacturer due to the rise of smartphones.
Businesses in the insurance industry have been working hard to stay up to date with the latest tech trends and tools that are taking the business world by storm.
The insurance industry is undergoing a technological transformation that is changing operating models, processes, and products. These changes come with a shift in insurance industry trends.
4 Trends that Drive Disruption in the Insurance Industry
The emergence of the insurtech industry, along with a shift towards a customer-centric and usage-based business model and the introduction of tools powered by AI and Big Data, are quickly shifting the insurance industry from traditional methods to more unfamiliar ground.
Let’s dive further into each of these trends and explore the implications they have for the insurance industry.
- Rise of Insurtech
Insurtech is an emerging industry that utilizes technology and modern innovations to change how traditional insurance is performed. Insurtech companies use technology to automate tasks, streamline operations, and provide customers with a more personalized experience. Insurtech companies aim to have a radical impact on the insurance industry, developing tools and processes to enhance the customer experience, promote efficiency and flexibility, reduce operating costs, and help battle fraud.
Insurtech startups like Lemonade, Insurwave, Next, and Avinew are some of the insurtech companies using AI, big data, blockchain technology, and automation to revolutionize the insurance industry.
Many insurance organizations are now starting to form partnerships with insurtech companies to utilize the technologies and tools they offer to improve their operations.
- Customer Centricity
More than ever, insurance customers are looking for more flexibility and the ability to access services and products through multiple channels. According to the EY 2020 Global Insurance Outlook, customers have rising expectations regarding digital channels and personalized experiences.
Competition among major players in the insurance industry has always revolved around furthering their reach and attracting more customers, but now more focus is being placed on customer satisfaction and retention through improving the customer’s insurance buying journey. Convenience through digitization, automation, and improved customer service are among the top priorities for insurance companies.
- AI and Big Data
AI and big data are rapidly transforming the insurance industry. These technologies are being used to improve risk assessment, fraud detection, and customer service. However, there are also cybersecurity and privacy concerns associated with the use of these technologies. To mitigate these concerns, insurers need to implement strong security measures to protect their data, be transparent about how they use data and give customers control over their personal information. By addressing these concerns, insurers can ensure that they are using AI and big data in a way that benefits both their customers and their businesses.
- Shift to Usage-Based Insurance
Using Internet of Things technology, usage-based insurance (UBI) uses data from a vehicle’s telematics device to track driving behavior and adjust premiums accordingly. The data collected can include things like mileage, speed, braking, and acceleration. This data is then used to calculate a driver’s risk score, which is used to determine the premium.
UBI can be a more accurate way to assess risk than traditional insurance, which is based on factors like age, gender, and driving record. This is because UBI takes into account a driver’s actual driving behavior, which can be a better predictor of risk than other factors.
AllState, Liberty Mutual, and State Farm are some of the insurance providers offering UBI for vehicles.
Meeting Market Demands Among Shifting Conditions and Trends
The insurance industry is undergoing a period of rapid transformation, driven by the rise of insurtech, customer centricity, the use of AI and big data, and the shift to usage-based insurance.
Keeping your business afloat amid quickly shifting trends requires openness and the ability to embrace and adapt to the changes required to meet the market’s demands. It’s imperative that insurance businesses take a closer look at the emerging market trends and explore how to adapt their business models to start operating with these trends in consideration.
Looking to learn more about emerging technologies in the insurance industry and how they can transform your business? Trufla specializes in offering AI-powered, data-driven solutions to help brokerages take their performance to the next level. Contact us today.