4 Questions Which Shows Where The Insurance Industry Will Be In The Future
In the past few years, we have seen feverish growth in the visibility of insurance’s digital transformation. But as the movement gains in maturity, what’s next? Let’s look at a range of predictions to see if a roadmap is emerging for the direction of the industry. Here are some of the most pressing questions:
- Is AI’s breakout on the way?
Artificial intelligence is cited as the solution to many of insurance’s problems. It promises faster, fairer decisions; shorter customer service queues; and more. But what about moving beyond identification as a solution and into implementation? Virtually every entity that has a place in the insurance industry found a discussion thread around AI. However, if you will try to picture it out, we can assume that 2019 will be the year that AI steps out of the headlines and into the business-problem resolution. In fact, 60% of insurers say they are currently investing in “AI-based technologies to improve operational processes,” and that is according to the research from Accenture and Oxford Economics.
2. Where will the insurance competition come from?
Uber is one of the most-discussed companies on Earth, for many reasons: its normalization and digitalization of hired rides, its forays into food delivery, its labor-relations mixups, and its problematic corporate culture. But, for insurers specifically, the proliferation of this company and its follow-ups have created new types of insurance covering individual riders and every ride, that could herald a new trend towards tech giants getting into insurance themselves — not the least of which is Amazon, who is already partnering with Chase and Berkshire Hathaway on a health venture. Frankly, today’s technology giants have just made as much customer data as insurers, which includes information that goes far beyond basic risk profiles and financial status. With this being said, this also gives them a strong foundation for entering a variety of financial services markets, including insurance.
3. How does product development absorb digital advancements?
The proliferation of sensors holds the promise of a world of customer data and information that insurers couldn’t fathom in the last generation. But with that information comes the question of whether or not traditional products can absorb and operationalize this new world — not to mention serve the customers that live in it. But how can agility and time-to-market be improved to remain competitive and differentiate in an increasingly fluid society and marketplace? If you will notice, an increasing number of customers want coverage they can activate or deactivate as needed or insurance that activates immediately at the point of sale. This rise of connectivity has generated a massive amount of real-time data and turned the insurer’s relationship with policyholders from static and transactional to dynamic and interactive. There is a broader, more foundational challenge confronting carriers — and this is the ability to continue changing to keep up with ever-shifting conditions in the economy and society at large.
4. Have insurtech winners already been identified?
Savvy industry observers have identified the wave of insurtechs entering the sector over the past few years — and the corresponding increase in investment dollars spent and partnerships formed, as a temporary phenomenon, while the industry processes what’s workable in the short and long terms. Now, we are seeing distinct winners in the insurtech market who are reaching the shore, but the rest — the vast majority — are not making it. But do note that fewer successful startups don’t mean that there’s a lack of interest in digitalization. In fact, technology investment is higher than ever. This means the heavy activity in the past few years will be transferred from ideation into operation. Insurers have collectively started to sort through the flood of information for the best possibilities and select the most promising solutions. For sure, sooner or later, we will see another wave of a different size and color in the future. And as new computing trends like 5G, AI, among others, and even quantum computing gain traction and become more feasible and pervasive, a new wave will pick up speed for sure.