Fast-tracking trends in the insurance industry

Several transformations have disrupted the traditional operations and perspectives towards the insurance industry, being compelled by the implications of the current pandemic.

As the crisis persists to affect the industry and its consumers, some major trends that emerge in the insurance sector over the year would likely stay or accelerate in the following year.

Technologies and digitalization are developments that almost every industry has implemented to adapt to the new normal. Insurance companies are no different.

“Cutting-edge technologies are quickly maturing. While AI (artificial intelligence), IoT (Internet of Things), and big data have been buzzwords until recently, today, it is difficult to imagine the future of insurance without these technologies,” Tal Daskal, CEO of EasySend, wrote in an article published by Forbes.

From this widespread digitalization in the insurance sector came a shift to a culture focused on innovation.

“Digital transformation is no longer something to be proud of; rather, it is a matter-of-fact force that drives the industry forward. The need to innovate as a matter of strategy becomes increasingly apparent to insurance leaders,” Mr. Daskal said.

“This digital culture empowers insurers to innovate when it comes to age-old insurance problems such as risk assessments, claims processing, and policy sales,” he added.

This ongoing digital transformation across the insurance industry would indeed carry on for some years, according to an article by Artificial, a London-based company providing an integrated insurance platform. Citing data from management consulting firm McKinsey, Artificial added that insurtech funding has consistently grown year on year since 2017.

Along with digitalization, a trend among consumers in the insurance sector is personalization. 

“Customers are well aware that digital communications mean that their insurer collects their personal data — anything from behavioral data to their location or any information they have submitted. In return, customers expect a business to use this information in order to improve and personalize their experience,” Mr. Daskal explained.

In a report titled “Guide insurance customers to safety and well-being,” Accenture showed that consumers are more willing to share personal data for more personalized pricing, offers, and discounts in return. But they expressed no increased willingness to disclose their data without those incentives as exchange.

“They are increasingly demanding to be charged based on behavior and habits — and they’re willing to allow insurers to collect and use their data in exchange for that value,” the professional services firm added.

Accenture’s study also presented that millennials and younger consumers, aged 18-34, value sustainability. 67% of them want digital experiences that promote sustainable travel and shopping practices.

Some insurers seemed to have already positioned on ethical and sustainable business practices, as 71% of the said demographic in the study shared that their insurers deliver so.

“Personalization is the name of the game,” said Mr. Daskal of EasySend. “Laser-focused personalization capabilities are the new competitive edge when it comes to acquiring and keeping customers in 2021 and beyond.”

Mercer, a management consulting company, also saw the increasing pressure on employers to speed up their environmental, social, and governance (ESG) initiatives in its “2021 Global Talent Trends — Insurance Industry Outlook.” Insurance companies are now 1.4 times more likely to make sure that every executive has shared obligations for ESG metrics and 1.2 times more likely to bind ESG goals with the company’s purpose.

In 2022 and beyond, Artificial also considered that ESG issues have wide-ranging implications for insurers. “A growing number of providers will consider ESG risk factors when undertaking risk assessments and underwriting,” it said in its article. “And industry standards across multiple ESG issues including human rights and climate change are evolving every year.” — Chelsey Keith P. Ignacio