8 Trends Shaping the Future of the Insurance Industry, Pt. 1 

Sigal Biran Nagar

At Tia, a Sapiens company, we have identified eight key trends as critically relevant for the future of insurance over the next 12 years. These are based on an analysis of global megatrends, input from our subject-matter and insurance experts, desktop research, and discussions with the Copenhagen Institute for Future Studies.

They take in some aspects of the megatrends, and some of them overlap and interact. Which of these trends has the most potential to impact your business? Which will be the most disruptive and which holds the greatest business opportunity? These are some questions to pose to your own management and/or development teams as you strategize for the future.

1. From reaction to prevention

Insurance providers are well-positioned to use data in the risk analysis space and place more emphasis on value-added services. As such, the insights and experience of insurers can easily translate to lifestyle coaches or risk advisors, particularly as individuals are transitioning from a reactive to a proactive mindset in health. They are moving from treatment to prevention. This involves a shift away from risk evaluation and protection and towards prevention – involving a degree of asset optimization – on the part of insurers. This will be about supporting individual risk management with knowledge, information and innovative nudging and gamification mechanisms. The challenge for insurance providers will be striking the appropriate balance between that of a knowledge provider and a service provider without compromising their core business.

Implication: Insurance companies should build a new strategy for customer service that includes an ever more complicated network of ecosystem partners – from service providers to producers of goods such as boilers, power switches etc.

2. Data value and security

Hyper-connected and mobile populations using immersive and cloud-based technologies are leading to an explosion of data. There are new layers of information built around everything that we do. These have the potential to vastly improve lives as well as making them more complex and potentially less secure by opening a host of new portals for malicious surveillance and attacks. Data security has already become a high priority for national governments and businesses due to the growth of cyberattacks. Given the increasing vulnerability of sensitive information, there is a growing fear of exploitation and greater calls for confidentiality and privacy protection. As a result, the regulatory landscape is changing rapidly along with the expansion of commercial applications.

 Implication: Regulations of data privacy will drive IT investments

to ensure that companies follow the ever-tighter regulations. However, data will be traveling through your company. Insurers will invest in advanced analytics and machine learning to get the most from their information streams.

3, Freedom from ownership

As societies become more complex and wealthier, consumers’ consumption of non-material goods, services, and experiences will rise in comparison with their consumption of material ones. In a post-material society, access to products and services facilitated by digital platforms could become more important than ownership. This will free consumers from the hassles of having insurance, worrying about maintenance and financing purchases. A combination of technology development, resource scarcity, and demographic change is driving this development in several markets. In response to this demand, we are witnessing the emergence of subscription business models (auto mobility solutions and renting

services, for example) and new means of exchange (social capital, for example) on sharing and bartering networks. Some argue that freedom from ownership could eventually lead to peak consumption of goods in high-income markets. Freedom from ownership is also enabling time-constrained, experience-seeking consumers to indulge in more complex and multi-faceted experiences. These blend physical and virtual environments through online, virtual and augmented realities.

Implication: We forecast a shift from individually owned insurance objects to multiple objects owned by larger entities. The insurance needs will follow. The consequence is a growing number of fleet-like insurers and short-term covers, potentially backed by IoT/telematics technologies.

4. Increasing service expectations

Insurance products are changing. Customers want deeper levels of customization and seamless delivery of services regardless of channel. They seek on-demand services that are realigned with their values and/or meet the challenges they face. Customers’ expectations are increasingly “liquid”: they transfer good service experiences from one industry towards their service demands in another. Also, they only want to pay for objects and services they use.

This trend is exemplified by the emergence of concept selling – selling a vision or purpose rather than a single service. This sets organizations’ service culture, helps them stage experiences, and use assets to engage with end-users’ emotional needs. Successfully managing service expectations helps organizations constantly offer increased relevance. This allows them to avoid the service commodity trap and maintain profitability. Customers are increasingly organized through platforms. This – along with the emergence of co-creation processes – means they’re more involved in-service design and delivery in context specific, location, and lifestyle-based settings. This is leading to the emergence of hyper-niche markets that cater for a specifically defined user-base.

Implication: We will see a push towards modular covers that can be mixed and matched with the customer’s specific insurance needs at a lower premium than traditional insurance products. These could potentially be usage-based. Communication and claims settlement strategies will move towards individualization, based on the needs and expectations identified via AI and advanced analytics.

Stay tuned for the final 4 trends in my next blog post.

This blog was excerpted from the Are You Ambidextrous? vision study.  Read the full study here.

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Sigal Biran Nagar

Sigal Biran Nagar Sigal was VP Marketing at Sapiens during 2020-2021, responsible for driving Sapiens marketing team globally. She is an accomplished global marketing and communications executive. Her background includes senior roles at various international conglomerates including: SanDisk (now Western Digital), Strauss, ECI Telecom (now Ribbon) and more.