From more demanding consumers to harsher market conditions, a number of different aspects are currently affecting the insurance industry. Rather than caving under pressure, the industry saw these unique challenges as new opportunities, causing some profound changes to happen in what was once considered a particularly strict and conservative field.
Insurance providers are now forced to adapt to new changes and find innovative solutions to the latest issues, and the trends described below are just some of the different ways the insurance industry could be reshaped and elevated in the following years, possibly having significant implications both for customers and insurers themselves.
Some experts estimate that approximately 30% of future premium insurance volume will stem from new proposals, meaning that the industry is quickly changing from product-led offerings to service-led experiences that prioritize consumers. It might also mean that newer, more advanced technologies such as IoT and AI will be essential to the future of insurance, helping to analyze patterns and predict behaviors in an effort to provide the best possible customer experience. Even though a digital transformation could be challenging for many insurance companies, finding platforms, tools, and other solutions that will simplify this task will be key to future success.
In places like the US, younger generations differ greatly from their predecessors. Apart from having broader knowledge, higher expectations, and unique needs, their tech-savvy nature has also turned them into a more digital consumer. What’s more, they tend to show a higher focus on wider choices, instant gratification, and constant change as well. This means that younger consumers are much more likely to leave sign-up processes in case they encounter any difficulty or setback. For that reason, the insurance industry must improve its digital efforts and prioritize user experience, if it wants to survive the new generations of customers.
When it comes to countries like Australia, on the other hand, insurance providers haven’t had a great track record. Some of the largest insurers in the country here were selling add-on insurances to their customers along with credit cards and personal loans, most commonly using deceptive and unethical sales practices. This lead an increasing number of Australians to claim an add-on insurance refund with an experienced team, in an effort to get proper compensation for unfair conduct. Many are choosing to make individual claims with the help of experts, but some are deciding to join class-action lawsuits as well. Regardless of their choice, Australian insurers will undoubtedly have to compensate all wronged parties in the near future.
Offerings relating to the internet, such as home insurance connected to home sensors and motor telematics, are the primary cause of concern for many consumers. A significant percentage of customers don’t feel comfortable sharing their personal data collected from home and car sensors with their insurance providers. Only around a third would currently be willing to share this data in exchange for lower premiums and more personalized coverage. As privacy continues to cause apprehension in the modern digital world, it seems like consumers will be more likely to choose higher security and better privacy policies over more affordable premiums in the future.
Personalization has always been an important aspect of attracting and retaining customers, but precise customization skills could truly be crucial for gaining a competitive edge in the near future. As already mentioned, consumers know that communicating with insurance companies means their personal data will be collected, like with most other digital transactions. Not only do customers expect higher privacy, but they also need insurance companies to use this data in a more intentional way, such as providing more personalized products and experiences. Clearly, tailored products are necessary for success, allowing insurers to increase the probability of sale, improve customer retention, and receive significant value from every consumer.
Innovation will be the main focus
The insurance industry was always considered to be traditional and conservative, but even this aspect might be changing in the near future. In order to meet the needs of modern customers and achieve success in the digital world, an increasing number of today’s insurers are adopting the newest technologies and changing their manner of working. The digital transformation causes insurance providers to resolve common issues such as claims processing and risk assessments, while younger audiences encourage more honesty and transparency in the industry. As a result, a change in corporate culture can often be noticed among insurers, one solely focused on innovation.
Evidently, the insurance industry is rapidly shifting, and for the better. With an increased focus on personalization and improved customer experiences, all powered by innovation and digitization, the future of insurance will likely be a more open, engaging, and customized journey.