So, what were the most important trends in the insurance industry in 2017? We outline some significant points that have emerged.
- Automation and Artificial Intelligence (AI)
Automation of complex business processes is increasing and is mainly being driven by the need to reduce processing times and costs. Drones, chatbots and robo-advisers, for example, are all becoming more common in the industry, and AI and machine-learning tools are being more widely implemented.
- New products for the sharing economy
Innovative products are emerging that function to tackle the needs of the sharing economy. Insurance is now needed to cover situations that have emerged as a result of new technology and is required on a more on-demand basis.
- Increased use of digital and mobile
There are numerous examples of innovation in this arena, with companies such as Haven Life, Ladder and BIMA adopting technologies to introduce products that allow for swifter decisions and to streamline the policy purchase process. In addition, mobile apps have enabled widespread lifestyle tracking to enable wellness incentives, and car insurance apps are now being used to encourage and reward safer driving.
- Changing market dynamics and value chain disaggregation
New firms have begun to emerge that offer products and services that only cover certain parts of the insurance value chain. These individual portions of the value chain include distribution, underwriting and claims. This may lead to insurers in the future concentrating on specialising within their core competencies whilst partnering with others or outsourcing other areas.
Advanced analytics of the vast available data are being used to improve customer experience and boost profitability. Analyses are allowing insurers to access more accurate risk management and predictions of future behaviour. From a customer perspective, this can provide a more personalised service based on past preferences and behavioural data.
- Value-added services
Value-added services are increasingly being used to obtain a competitive advantage and build a more complete relationship with customers. Technological advances are making it easier for insurers to provide value-added services, including lifestyle management tools such as health management apps, healthcare consultations, home-monitoring apps, concierge services, and so on.
- The Internet of Things (IoT)
Enabling new models and creating new data, the Internet of Things is proving attractive to insurers. Smart homes and connected devices are boosting the amount of data available, meaning that pricing and underwriting are becoming more dynamic and personalised.
Blockchain technology has the potential to help the industry utilise tools such as smart contracts, digital transactions and digital asset management. Blockchain can offer secure, reliable and fast applications and a decentralized database, which could lead to a reduction in operational costs.
- Augmented Reality (AR)
AR is already being used for marketing (apps can use AR to explain the services and products on offer), for employee training (by removing the limitations of being office-based) and even in the field (for helping with the inspection of damage after an accident).
This article was written by Nick Hoadley, Managing Director, Insurance Search.
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