5 New Trends in the Insurance Business
Thanks to the desire and anticipation of changes, insurers can make the future with their own hands. Insurers are demanding faster transactions, both payments, and payouts, and more and more consumers want to work directly with insurance companies without intermediaries. This shift is due to the development of technology because the smartphone has provided consumers with a mobile device that meets their requirements.
5 Key Trends That Will Affect the Global Insurance Sector in the Next Decade
- Social Sphere: all forces go to the client.
- Technological: advances in software and hardware that turn “big data” into useful insights.
- Environment: Emergence of more sophisticated risk and risk transfer models to address the increasing severity and frequency of catastrophic events.
- Economic: growth of economic and political power in emerging markets.
- Political: globalization, harmonization, and standardization of the insurance market. It is also possible for insurance software development.
These trends will intensify, leading to a situation where customers will be more willing to buy “direct”, using their online and offline network of “trusted” friends and family to guide their choices. This will lead to a fundamental rethinking of the role of “recommendations” of intermediaries and the disappearance of distributors as a sales channel.
From a reactive business model to preventive: commercial insurers are already ready to use connected devices and sensors for the development of risk management and loss and increase in performance, but there are assumptions that life insurers will also use them.
Technological Developments that may Impact the Insurance Industry
- The rise of smartphones and tablets, coupled with cloud computing, provides constant access to the internet.
- Rapid growth in computing power and storage enables the accumulation and analysis of extremely large amounts of data.
- Growth in the number of active sensors and devices connected to the Internet.
Not all new technologies need to be used to grow a company. Knowing these developments will help you communicate with clients who will feel more comfortable working with someone who understands their concerns.
Advances in artificial intelligence technologies such as machine learning, natural language understanding, and intelligent decision-making will enable insurers to move from using technology to processing transactions to making decisions. Today, analytical methods are used to make ad hoc decisions using structured data.
In 2023, the use of unstructured data (such as social media, devices, video, and audio) successfully complements structured data, enabling insurers to make strategic forward-looking decisions.
Insurance Sector and Data
The insurance industry has always used, first and foremost, internal data in a structured format to make operational decisions about which customers to target, how to assess risk, and how to assess losses. Now, non-insurers will increasingly use large amounts of real-time sensor data, unstructured social media data, and multimedia data such as text, voice, and video.
As sophisticated AI techniques evolve, insurers will begin to use this unstructured data to make forward-looking strategic decisions, such as which product or solution is best for a customer given their current and future situation, which developing countries to enter, and when and how to proactively manage customer experience to retain the most profitable customers and get rid of unprofitable ones. Insurers that can leverage real-time “big data” and advanced predictive modeling techniques will gain a significant competitive advantage. At the end of 2021, life insurance company Northwestern Mutual signed insurance for 18.8 billion U.S. dollars.
Another adaptation that needs to happen for continued growth in the insurance industry in 2023 is understanding what it means to ensure people are in an on-demand economy. The technology of “insurance on demand” is a new challenge for traditional insurers. Inshurtech startups have long offered such products on a turn-on/turn-off basis.
Data and technology to remain competitive in the insurance industry.
As technology improves, competitors in the insurance market will have the same advantages and opportunities, but success will depend on those who first use them. To use this gift of technology, you need to analyze the data that are collected from consumers. Knowing this data will help insurers update underwriting and insurance tariffs.