The Need For The Insurance Industry To Evolve And Its Benefits Towards Its Consumers
Insurance is a trillion-dollar industry. But, in the last 50 years, despite massive sweeping changes to the way we live our lives brought about by the rise of digital, the insurance market has, until now, remained largely untouched.
As industries from healthcare to retail, and even the ‘traditional’ banking sector, have embarked on journeys of digital transformation, retiring legacy IT systems and investing in new fintech, insurance has been slow to follow suit, leaving it lagging.
At the same time, consumers have embraced new, digital ways of engaging with the brands they routinely interact with and this has changed the expectations of their insurance company.
To stay relevant in the eyes of today’s connected consumer, insurance companies need to find a way to promote customer loyalty, not based on apathy, but on great products and services. Ones that customers trust to truly help them recover when something goes wrong.
How the insurance sector will evolve in the next 10 years
Over the next decade, we will see an increasing need for insurance that is fit for the digital age. Accordingly, insurance will become more flexible and mobile-first. We’ll also see a rise in data-driven insurance models, such as pay-as-you-go and telematics.
In the mobility sector, ownership models are shifting towards ‘mobility-as-a-service’ and autonomous driving technology is developing fast. As a result, insurance will need to be extremely flexible and targeted in the future, to cover drivers appropriately across all kinds of setups and situations.
Customers will increasingly search out personalized insurance that suits their individual needs — insurance that covers the things they actually care about and that is priced fairly and transparently.
There will also be an increasing role for insurtechs in the sector, not just as competitors to incumbents, but as partners that, together, can help to drive innovation in insurance forward.
New products and services
With the increasing digitalization of the insurance sector, point-of-sale insurance will become far more common, with insurance shifting to a seamless, one-click, add-on to the purchase of all kinds of high-value items, including cars, watches or bikes.
With the proliferation of all kinds of sensors in consumers’ day-to-day lives, insurers will use the increasing data available to offer truly customizable and flexible insurance products, based on people’s lifestyles.
What new demands will we see?
We already know that customers are demanding mobile-first insurance, and this will only increase. Today and in the coming future, most of 25–34-year-olds would like to carry out all general insurance transactions on their smartphones.
Flexibility and personalization will also be a key demand. Most consumers would prefer flexible, usage-based insurance instead of traditional models based on age, gender, and location. Personalized, flexible policies based on simple, transparent questions will not only ensure consumers are buying cover that fits their needs but will also help build trust in the sector by giving consumers the power to understand, and ultimately impact, their insurability.
Insurers themselves have been slow to innovate thanks to the weight of the transformation task. To move the sector forward, we will see increasing demand from traditional insurers for insurtech partners that can help them to bring a digital-first experience to customers, without having to overhaul their whole business model.
What insurers can do to stay relevant
Insurers and companies offering insurance need to put the customer at the heart of everything they do. Rather than see insurance as a one-off yearly purchase, they should look to forge ongoing relationships with customers through digital channels, where consumers can make changes to their insurance, ask questions and access complementary products and services. Insurers must also become more responsive and transparent in their interactions with customers, tailoring flexible insurance based on the needs and wants of the individual.