The world of insurance, which over the centuries has never ceased to change as it adapts to the evolution of community and customer needs, is now facing a change as fast as ever before: the flywheel of what is increasingly clear as an epoch-making revolution is, this time, technology. Internet of Things, Big Data and Blockchain are in fact some of the innovations that are changing the industry quickly and irrevocably. However, if on the one hand – thanks to technology – it can benefit from more accurate risk analyses and more immediate b2c and b2b interactions, on the other hand it has to deal with what is increasingly seen as an imponderable risk: climate change.
Technological advances will increasingly enable automation to be relied upon for tasks that currently require human presence (e.g. relying on in-vehicle sensor recordings to settle road claims disputes), while reducing the risk of fraud, with a clear benefit to insurers’ budgets. However, they will have to equip themselves to deal with new scenarios, ranging from damage coverage for increasingly frequent adverse weather events to data theft and network security.
Here then, according to a report by the EY insurance group, are the 6 trends that will be able to radically change the world of insurance.
- Claims down. Thanks to the analysis of data from an increasingly widespread network of sensors, but also to the increase in safety (especially in motor insurance), claims for damages have been declining for years: in the twenty years from 1994 to 2014, only in Great Britain claims relating to motor accidents have decreased by 39.2%. And a similar effect are getting the sensors to monitor offices, businesses and private homes.
- Increasingly effective technology. Innovation in processes will also lead to significant savings, for example by automating claims management for amounts below a certain limit if the system does not detect any possibility of fraud. And less costs and more efficiency will also be achieved thanks to Big Data analysis, the use of IT platforms for customer management, and the intrinsic security of the blockchain.
- The sensor revolution. The Internet of Things with its network of sensors that will cover cities, buildings, vehicles, and even people, will be increasingly important for insurance companies, which will be able to shift the focus to prevention rather than compensation, especially in non-life insurance. In parallel, however, insurance companies will have to invest in cybersecurity in order to be able to protect the data collected by the sensors, which will constitute a fundamental asset for the management of business strategies.
- The digital split. Insurance companies will have to keep up with the times, however, and quickly convert to digital, focusing more and more on the customer experience: customers, accustomed to immediate and satisfying interactions with giants such as Amazon, in fact, will increasingly require a service “ad personam“, with quick, timely and accurate answers, preferably by choosing the online channel. And although the figure of the broker will not disappear (because the direct relationship will continue to be important in terms of advice and negotiations) the difference will no longer be the level of human interaction but the effectiveness of “customer service” for claims and compensation.
- Better risk management. Thanks to tools such as Big Data Analytics and data collected by the ever-growing network of IoT sensors, companies will be able to count on ever better risk management, which will result in lower claims volumes and higher profits for insurance companies.
- Climate change. The imponderables, for insurers, will be just around the corner: the greatest risk is climate change, with the increase in extreme weather phenomena such as landslides and floods, which will lead to an increase in claims in non-life insurance. Weather damage management will therefore become a key area for companies.