Top five insurance industry trends for 2019

The global insurance market is undergoing a transformation, largely driven by ‘digital-first’ business models.

Leading this transformation is changing customer needs, automation and artificial intelligence (AI), digitisation and fierce competition from upcoming players.

More than ever, it’s time for insurers to take a look at the top trends that are shaping our industry.

Below we’ve outlined our top five insurance trends of 2019.

5. INSURTECH PARTNERSHIPS

Insurers know their customers’ lives are being shaped and transformed by new technologies.

Insurtechs’ products and services mostly target retail customers. This includes small businesses and consumers.

The emerging insurtech (or insurance technology) industry, is gaining strong traction, with many start-ups developing new business models and enhancing customer experiences.

PWC’s InsurTech report highlighted that 56 per cent of insurance companies surveyed felt that between 1 per cent to 20 per cent of their revenues were at risk to insurtechs.

Most insurtechs are acting as enablers. This means that they offer products and services that help insurers and reinsurers improve their processes and better serve customers.

These start-ups are leveraging new technology and a better understanding of consumer expectations to increase efficiencies in the insurance industry. Some are helping incumbents deliver better end products, while others are directly competing with legacy players.

Legacy players are also innovating. In particular, insurers and reinsurers are investing in insurtechs and fintechs working with relevant technologies. At the same time, they are improving their own direct-to-consumer digital interfaces, increasing their disruptive threat to brokers.

4. BLOCKCHAIN MAINSTREAMING

Mainstreaming blockchain allows for large volumes of customer data to be processed in real time, with secure and easy transfer of data among relevant stakeholders.

For example, AIA Hong Kong has launched a blockchain platform which allows the life insurer and its respective bank distributors to share documents and policy data in real time, improve transparency, streamline onboarding processes and reconcile commissions automatically through smart contracts.

Meanwhile in Europe, AXA has begun offering flight-delay insurance through a blockchain platform using smart contracts and parametric triggers.

Looking ahead at 2019, insurers are more likely to launch more impactful blockchain initiatives that is likely to change the shape of insurance operations.

While these might not be implemented suddenly, these initiatives are likely to lead a wider blockchain adoption in future years.

3. PERSONALISED PRODUCTS

Customer preference is shifting towards on-demand insurance lifestyle products. They also prefer personalised insurance covers over the traditional one-size-fits-all products that we see on the market.

A greater understanding of consumer behaviour is likely to lead to more personalised premiums and accurate risk assessments, which will assist in enhancing customer experience and reducing false claims.

Insurer-insured relationships are also likely going to be impacted by lifestyle apps.

Application programming interfaces (APIs) can assist in the development of insights-driven offerings, as they integrate data from multiple sources.

Similar trends include peer-to-peer insurance, micro insurance and more flexibility with coverage options.

2. ARTIFICIAL INTELLIGENCE & AUTOMATION

Artificial intelligence is already being applied in efforts to improve the current claims processes used within the insurance industry.

Going forward, data analytics will continue to become more useful in driving underwriting decisions, focused risk selection, providing more targeted support for customers and improving pricing accuracy. This will profoundly improve customer experience, operational efficiencies and market competitiveness.

These advancements will also assist in reducing effort, costs and time for insurers.

Claims processing and management are also currently handled by a range of employees including claims administrators, case managers, payments officers, technical officers and so on.

However, with the advancements in modern technology, new processes are being developed in which claim reporting, information gathering, auditing and communication with the customer can now be done, and done more efficiently, using AI.

The potential here is huge, as the process could allow clients the chance to file claims without having to fill out copious amounts of paperwork and spend hours on hold or playing phone tag with their insurance company.

All of this is largely driven by more advanced data processing capabilities, advancements in AI algorithms and the latest data channels.

1. ADVANCED ANALYTICS & PROVACTIVENESS

As we head in to 2019, we expect to see premiums becoming even more personalised. This can be attributed to technologies such as wearables, mobile-enabled insurtech applications and internet of things (IoT).

With more customers utilising connected devices, property and casualty insurers now have the ability to extract real-time data.

With accurate data on the loss exposure of individual customers, insurers can proactively respond with highly personalised and timely interventions.

The use of advanced analytics can further segment customers based on needs, model behaviours, optimise business strategies and identify growth opportunities. Scale can be further incorporated through AI, machine learning and automation.

Advanced analytics will be deployed to dynamically segment users and needs, model behaviours and identify exceptions, adjust policy prices, optimise business strategies and identify new growth opportunities.

Insurers are investing in more efficient technology such as IoT, AI, robotic process automation (RPA), machine learning, big data analytics, blockchain and predictive analytics.

These newer technologies present a great opportunity for insurers to streamline their business workflows and better drive cost efficiencies.

If insurers want to thrive in this uncertain landscape, they must address many external and internal forces behind this transformation.