Last Tuesday we began to review the ten trends that will instigate the most changes in the insurance industry in 2017, according to Capgemini. We spoke of the impact of artificial intelligence, the sharing economy, and the mobile technology that will have an affect on purchasing all kinds of policies this year, making claims, sending accident reports, etc. Today we will focus on the five other areas that are also included in the consultant's list of top trends for the insurance industry.
What is causing the biggest disruption in the insurance sector globally? 5 more trends that are changing the world of insurance.
This post is also available in Spanish.
Trends that are transforming the insurance sector
Use of analytics for improved profitability and customer experience
Data analysis is a valuable source of market intelligence that provides the base for making decisions. Recognizing the competitive advantage that comes from cross-checking and analyzing data from their wide customer databases, in the case of insurers, this analysis is allowing them to improve risk management and to achieve higher profitability.
In 2017, it is expected that the sector will use data analysis for identifying new risk factors, analyzing customer loss or detecting fraudulent claims. Its increasingly intensive use will reduce contracting and claim cycles, allowing for example, real-time pricing or reaching agreements on claims practically in the moment. It will also lead to a greater profitability, by allowing for a greater selection and mitigation of risks.
Last but not least, data analysis will offer companies in the sector a greater level of understanding of their customers’ preferences, which will allow them to offer hiring and customer support experiences perfectly adapted to the needs of each client, and in accordance with the new digital standards of user experience.
Greater use of the Internet of Things (IoT)
Home and accident insurance have been the first to benefit from the Internet of Things, but its use will become standard in 2017 in all types of policies. If in the case of the home insurance policies, the smart homes have played a key role in its adoption, in other areas it will include wearables, sensors or drone devices which will be used to collect data, which will in turn be used to detect and calibrate risks, and to reduce and expedite claims.
For example, companies like USAA, American Family, State Farm, Liberty Mutual or Aviva are already encouraging their customers to install sensors. A challenge associated with the proliferation of these types of devices will be to integrate the different sources of data and know how to manage, analyze and extract knowledge from all large volumes of information collected.
Increasing use of value-added services
We are in a moment in which the fundamental change in any company has been (or should be) moving from being product or service-focused, to being customer centric.
Insurance companies are no exception, and in this moment they are putting their customers at the center of their decision making processes. Insurees have increasingly more sophisticated expectations with respect to how their relationship with their insurance company should be, based on their interactive experience with companies in other sectors. In this sense, the proliferation of smartphones, along with the analysis of data, offers insurers a great opportunity to provide their customers with value-added services that foster and consolidate their loyalty.
For example, health management apps are becoming more and more popular, including those that encourage access to free services from policies, those that allow online-consultations or those that offer real-time information obtained from sensors installed in homes and smart cars. In addition, these services don't only help increase customer loyalty - by fostering a deeper and more frequent relationship with their insurance company - but they also make a positive contribution to risk mitigation.
Blockchain to enable streamlined insurance operations
In 2017, business processes such as policy or claim management will borrow elements from blockchain technology - a revolutionary way of sending, receiving and storing information in a secure and decentralized way. Blockchain was initiated around bitcoin, but its uses have already transcended those of the electronic currency.
This interconnection between blockchain and insurance is destined to improve the quality of service, to speed up and expand access to data, to encourage cost reduction, to automate claims and to improve detecting fraud. However, all of these benefits should not distract insurance companies from one of blockchain’s medium and long-term implications: if the intrinsic decentralization of this technology becomes the standard, insurers will stop being risk managers and will become more consultors or facilitators. (And therein lies the importance of offering a top customer experience and strengthening ties with their insurees!)
Greater use of augmented reality
The combination of text, audio, video and data visualization that augmented reality offers presents an enormous potential for practically any sector. In the case of insurance, for now it is limited to areas such as marketing or training, by simplifying complex explanations aimed at customers and employees.
However, in 2017 it is expected that augmented reality will become widespread in other areas where pilot projects have already been successfully carried out, such as in damage inspection. In this case, augmented reality has helped to speed up and reduce mistakes in claim management.
As augmented reality costs decrease, we will see how this technology is also used to inspect loss in damaged vehicles, to carry out three-dimensional simulations of homes and detect where are the elements that are likely to cause an accident or should be insured, etc. These and other uses will help insurance companies to attract the attention of a larger number of customers, to know them better and to reduce the training costs of their teams, to name just a few examples.
This post is also available in Spanish.