5 Emerging Trends Shaping the Insurance Industry

Posted on 23rd October 2023

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5 Emerging Trends Shaping the Insurance Industry

Posted on 23rd October 2023

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5 Emerging Trends Shaping the Insurance Industry

As the world changes, so does the insurance industry. Climate change, the cost-of-living crisis, and the demand for more personalised products means there’s a big opportunity for insurers to help consumers make educated decisions about their financial health. Yet tough market conditions make responding to change a challenge.

However, modern technologies give insurance companies the capability to transform the way they work, the coverage they provide and the policies they deliver.

So, what does this all mean? How can insurers use the latest innovations to overcome revenue challenges and fuel their growth?

Join us as we explore five trends and innovations shaping the industry and how insurance companies can best leverage them.

1. The value of Generative AI

Generative AI is a major talking point this year, with models such as ChatGPT gaining prominence in the public consciousness. But what is the application in insurance, and how does it affect the industry?

Generative AI makes it easier for insurers to automate processes, such as risk assessment, claims management, and underwriting. Automation frees up employee time and empowers focus on higher-priority tasks. For example, insurers can use AI to automate basic claim inquiry response and quicken their claim settlement - something that is not lost on customers.

Crucially, insurers use AI to automate traditionally manual tasks and scale their business without increasing headcount.

2. Real-time reporting and dynamic pricing

Dynamic pricing is another emerging trend insurers benefit from. Digital-first insurers combine telematics and data analytics to create personalised products and set flexible policy prices in real time. The use of more robust data increases underwriting precision, and the personalised product can increase customer satisfaction and retention.

For example, a policyholder driving over the speed limit may see their car insurance premium increase. Determined to lower their premium, they drive safer to secure a better deal on their insurance. Similarly, a policyholder wearing a fitness tracker impacts their medical cover premium by exercising more and eating healthily— an attractive proposition for customers seeking more personalised coverage.

3. Digitised core operations

Digitising core operations is another impactful journey for insurers. Digitisation opens the door for participating in larger digital ecosystems. Likewise, the process also helps insurance companies reduce costs over time, freeing resources to focus on innovation and growing new revenue streams.

While digital engagement and cost-effectiveness are standout benefits, the most significant improvement is felt in the customer journey. For example, many insurers already leverage AI for speech and text analytics and to automate interaction for improved customer experience.

Similarly, insurers employ digital tools to support better collection and analysis of large data sets to make more accurate risk assessments. This helps insurers provide policies and premiums based on individual customer profiles. Moreover, digital tools such as AI and machine learning can detect patterns in data and identify potential fraudulent claims, reducing losses for insurers.

Digitisation also improves communication and collaboration within insurance companies. Through digital platforms and tools, employees easily share information, collaborate on projects, and work together in real-time. This promotes a more efficient and effective work environment, leading to better results.

4. Shifting risk factors

As society and technology change, so do the risk factors behind insurance policies. Insurers must be aware of the ripple effects new innovations can cause and the impact on coverage requirements.

For example, self-driving cars may drive down car insurance prices due to reduction of human error but could increase demand for cyber insurance in the event the vehicle is hacked.

Because of this, future-focused insurers are already working closely with their customers and technology partners to create tailored package products that mitigate risk.

5. Risk assessment for ESG

ESG objectives are increasingly important to customers and businesses. Yet maintaining these ambitious goals while also dealing with social pressures is challenging for insurers.

However, insurers use data insights to understand their ESG impact and act on their ESG goals. They can develop meaningful ESG scores for rating and pricing risk by integrating data from a diverse range of sources. This, in turn, helps insurers understand the financial consequences of ESG risk. For example, property underwriters can leverage data to reduce exposure to the physical impacts of climate change and adjust their pricing in line with the risk. They can also educate policyholders on how to safeguard their homes from extreme weather and help close the protection gap.

How INSTANDA helps insurers stay ahead of trends

One thing is certain for insurers: staying ahead of changing industry trends depends on access to the latest and best technology. Without next-generation tech, insurers will find it difficult to take advantage of new possibilities or adapt to pursue new sources of revenue.

INSTANDA provides a no-code platform explicitly for insurance companies. It enables insurers to take control of their technology the way they want and implement it at their own pace and scale.

Meanwhile, INSTANDA’s continual stream of real-time updates makes it easy for insurers to comply with legislative changes as they develop and maintain products, helping avoid hefty fines or penalties.

To discover how INSTANDA can improve your insurance business in a cloud-based environment and enhance your insurance products, you can book a demo or contact us today.

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