What are the big topics in the Insurance industry in 2020, and importantly what is in store for 2021.
What a challenging year for insurance companies. Some would say there were already enough challenges – without a global pandemic – especially, given the fact that the insurance industry has been heading down the path of disruptive innovation the last two or so years.
Well established and new tech-savvy companies are embracing new digital technologies that focus on many aspects, including usage-based coverage and tailored premiums.
Also read: Car insurance: tips on controlling the cost
Coronavirus will keep the insurance industry in weak health this year. The impact of COVID-19 will influence and affect business decisions for the remainder of the year and into 2021, as insurers manage their claims as well as their regulatory capital levels. Insurers’ business continuity plans will be tested as most workers operate from home during the pandemic. Conduct and governance will be scrutinized by supervisors and reviewed for effectiveness.
However, the pandemic could accelerate emerging trends in the industry. Digitalization, ESG and Asia are some keywords to watch, said the latest Allianz Global Insurance Report
The challenges of the Pandemic so far
On a global scale COVID-19 will impact insurers and reinsurers. Personal line claims will be made under travel, private medical Insurance, and health policies and, tragically, also life policies.
For Commercial lines, there’ll be frequent business interruption, contingent business interruption claims, trade credit, D&O, professional liability, public liability and employers’ liability claims. Some existing policies will not extend to covering claims related to the pandemic unless they have extensions for this.
The rise in claims will require insurers to carefully check their capital position continuously and consider new exclusions to cover. There will be no exception from regulators that insurers treat policyholders fairly, and not unreasonably deny justifiable claims. This will require them to provide transparent information about claims and coverage when policyholders contact them. No doubt, as seen with the 2003 SARS epidemic, there will be some inevitable disputes.
Other big challenges lie operationally, with employees working from home, they rely on remote access to company IT and this will test business systems and resources, not to mention the vulnerability in terms of cyber security and privacy.
Insurance trends on the rise 2020 / 2021
In this new decade, from 2020, the space and landscape is changing, and shaping up to see some real industry changes. As we see with FinTech and banks today, insurance companies continue to associate and collaborate with other companies, and tech companies to provide new, ground-breaking customer experiences. Customers nowadays want these solutions. Millennials especially do not want to fill out a form, they just want to get insurance there and then.
With insurers developing or using advanced analytics, IoT, and machine learning, more customised risk profiles can be used to improve the delivery of services.
The InsurTech space will see and deliver what people need, and they don’t just want a monthly premium, but a monthly policy that reflects their changing lifestyle.
Telematics. Also known as the Black Box Insurance
Technology, like mobile-enabled apps and IoT are two good examples of technology making insurance more responsive and accessible for customers.
Telematics demonstrates what data can do. It attracts customers, as it achieves a cheaper premium for the customer.
Many insurers can now fit a smart device, a black box, into a car that will measure the driver’s capabilities. Premiums are then based on how safe and conscientious a driver is, rather than paying for insurance based on the average driver.
Most telematics devices operate with accurate and reliable GPS technology and are used to capture average speed, acceleration, braking, cornering, distance, number of journeys, G-force (impact detection), and much more.
Paying high premium car insurance? Telematics could be the answer to your car insurance problem.
Also Read: Telematics, also known as Black Box
Digital Tailored models
On-demand tailored insurance products are now more available. The increasingly popular hybrid insurance policies can for example provide a mix of healthcare and life insurance benefits. Companies have blended these types of policies for the last two+ years for a more customised consumer experience.
AI and automation mean faster delivery for better claims and with new data channels insurers can gain better data processing abilities and improvements in AI algorithms and economic data.
For insurance companies, the key to exceptional customer services and reducing costs is collecting data in real-time, and rapidly. Drone technology for example, cuts down on manual time, intensive processes or when staff cannot get on-site to assess the damage.
Cloud computing and API networks; it’s so easy to share information and traditional insurance companies need to work in collaboration with tech companies or acquire technology capabilities. InsurTech companies are growing exponentially in the areas of auto, home and cyber insurance.
It’s not a secret that the insurance industry has struggled to digitally transform, with insurers relying on centralised legacy systems, but as a result, InsurTechs are exploring an API-first approach. The consensus of 2020 is insurance companies that take the lead will be at the forefront to succeed.
In the latest Allianz Global Insurance Report, Allianz chief economist Ludovic Subran, commented.
Experts know that for the insurance industry to survive, its future has to be digital and sustainable. Customers and investors demanding strong environmental, social and governance (ESG) strategies from companies is an accelerating trend.
It’s not an unreasonable request.
The coronavirus crisis has shown that sustainability and resilience go hand-in-hand. Besides screening long-term risks and improving investment returns as well as underwriting decisions, ESG acts as a business enabler. As companies increasingly implement ESG strategies, the demand for related products and services could rise.
Also Read: What is Premium Finance?