As the insurance industry continues to evolve in line with the shift in tech, culture and consumer demand, 2022 looks set to see the innovation stakes raised even higher. Lorenz Graff, CEO and co-founder of bsurance, advises the four defining trends which will shape the insurtech industry in the year ahead:
As we look to the year ahead, it would seem that things are certainly on the up. According to a recent Deloitte report, even against the backdrop of potential new Covid-19 variants, a third of insurers expect revenues to be ‘significantly better’ in 2022. The demand for insurance is expected to keep rising worldwide.1
But unlocking this opportunity requires change. Alongside the wider fintech market, the onus is on insurers to use the impetus of digitalization to rethink their operations and reimagine the customer experience to remain one step ahead and primed for growth.
But with so many new and emerging insurance trends and technologies, where to begin?
In this digital age, the once-standard insurance process – assessing risk, accepting premiums and paying claims – will no longer cut it. More than ever, customers are pressing for change. Today they expect their insurers to offer simple, transparent and flexible products and services – all omnichannel– and those that fail to do so will risk losing them.
In 2022, this will be seen in the continued transition towards embedded, digital insurance solutions as a way for businesses to connect customers to relevant insurance products designed to their exacting requirements at the Point of Sale.
This approach has many benefits. Take, for example, a consumer booking a holiday online. Previously, the process of buying travel insurance might have been left to a later stage when premiums had increased
– or even not at all due to the hassle and tiresome application forms typically involved.
Now though, in the same scenario, the customer is targeted with the relevant insurance solution at the exact point of making the booking – all without needing to speak to an insurance agent or make an inquiry online.
For the modern customer where time is of the essence, it makes buying insurance slicker and easier than ever before, therefore promoting much higher conversion rates and driving business growth. In turn, for the insurer it promotes efficiencies by speeding up time to market and prompting seamless, faster claims management and processes – all while also reaching out to the potentially uninsured.
In the future, we anticipate that the traditional model will be replaced with a more definitive ecosystem between the business, insurtech and insurance provider. In this way, insurance will no longer be viewed in silo but in terms of the entire ecosystem – with ease, speed and relevance key.
Alongside this, 2022 is likely to see further advancements in AI and umbrella technologies such as robotic process (RPA), machine learning and predictive analytics will continue to reshape the insurance industry.
And it’s easy to see why. According to McKinsey the widespread use of AI in functions and use cases could add up to a huge $1.1 trillion in potential annual value for the insurance industry.2
Across the board, this will be seen in everything from harnessing the power of AI-based data analytics to curate more tailored, relevant customer experiences amid the growing trend for hyper-personalization found in the wider retail environment.
We will also see the accelerated transition towards online help desks supported with machine learning for a more cost-efficient, autonomous customer service, and certain aspects of claims processing automated for a much quicker turnaround.
Besides helping deliver on the high-speed demand of modern customers, AI will also continue to help insurers to access more accurate reports in a shorter span of time in order to enhance fraud detection and conduct more sophisticated analyses.
A usage-based future?
Although not a new concept, it is only more recently that Usage-Based Insurance (UBI) has come to the fore with insurers and consumers alike – owing to its pandemic-induced acceleration within the car insurance market.
Amid the shift to remote working and reduced travel, the past 18 months have seen the fixed assessment framework for car insurance replaced by the UBI model where insurers use telematics in order to provide highly individualized premium rates based on a person’s usage, driving skill and distance travelled.
And although its acceleration may have been born out of necessity, the consensus is that it is here to stay.
This is because the UBI model can lead to major cost savings for policyholders and carriers alike. A safe driver who has low usage will automatically be charged a lower premium since they are less likely to get into an accident and make a claim, thereby rewarding good drivers and helping drive better road safety.
For insurers, personalized estimations of premiums can lead to more precise predictions of users who are most likely to file for claims to help elevate accuracy and increase overall profits.
Preparing for the unexpected
If there is anything that recent times have taught us then surely it is the need to be prepared, as much as possible, for the unexpected.
Be it natural disasters, cyber-attacks or even a worldwide pandemic, the reality is that catastrophes can be incredibly harmful to business.
With better data and better ways to utilize it, it is likely that we will see insurers seek even more innovative ways to help businesses keep one step ahead of a changing world and the new risks it brings.
Alongside parametric models, this will be seen with the continued rise of microinsurance which has been designed to provide people of low-income in areas such as rural India, South Africa and China with protection against specific perils in exchange for a low-cost premium. It is the perfect example of insurers tearing up the rule book and evolving in line with the wider landscape so that some of the world’s most vulnerable demographics are able to benefit from the security and resilience afforded by modern insurance.
- Why the West Midlands is the new face of fintech innovation in the UK
- The top 10 technology trends to watch out for in 2022
- What incentives are there for businesses to go solar in 2022?
- The top trends for IT support in 2022
Fit for the future
A changing world means changing demands, and insurers must adapt accordingly. By taking advantage of the latest digital innovations, insurers can improve methodologies, provide better rates, achieve a best-in-class service – and remain fit for the future.