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Insurance industry trends tend to not evolve as rapidly as trends might in some other industries, like consumer tech, but make no mistake about it, the industry is evolving. In particular, as the industry becomes more digital-oriented and InsurTech makes its mark, many changes are taking place quicker than they have before.
Specifically, within the property and casualty insurance industry, five trends to keep a close eye on, and perhaps participate in, include the following:
- Digital Insurance Services Are Becoming Necessities
- Insurers Are Adapting to New Climate Risks
- IoT Devices Are Helping Insurers Improve Risk Management
- APIs Are Enhancing Marketing and Customer Experience
- Insurers Are Expanding Outside Their Comfort Zones
In this article, we’ll look at each of these trends in more detail so insurance agents and carriers can get a better sense of what might affect them throughout the rest of 2021 and beyond.
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#1 Digital Insurance Services Are Becoming Necessities
One of the top insurance industry trends in recent years, and one that will likely continue in the coming years, is the move toward digital insurance services. From online quoting capabilities to digital claims and payment options, insurance agents increasingly need to provide digital services for their customers.
“Customers expect the ability to interact with digital agencies online, connect with agencies how they see fit, and have self-service functionality to access and manage their policies,” says Katherine Jones, Communications Manager at insurer Coterie, in a guest post for Talage.
They also need to become digital-oriented in terms of areas like marketing to reach more customers, keeping in mind that customers are changing their consumption habits in their day-to-day lives.
Solartis, an insurance policy administration/BPO company, notes how changing consumer expectations overall are seeping into the insurance market. “For example, it’s not uncommon for a buyer to go online, conduct a five-minute search, and have the exact desired product arrive at their doorstep in less than 24 hours. Insurance processes must advance to accommodate these changes in consumer expectations,” the company says.
#2 Insurers Are Adapting to New Climate Risks
Adapting to climate change has increasingly become an insurance industry trend, unfortunately, as extreme weather and natural disasters can affect property and casualty clients.
“The evolution of natural disasters and changing climate calls for increasingly sophisticated catastrophe models and pricing approaches,” notes McKinsey.
One way to adapt to this insurance industry trend is to take advantage of more precise data to assess risk.
“Next generation underwriting practices can take advantage of geolocation data for better predicting properties at risk. Many homes are currently uninsurable due to ZIP code, which is historically inaccurate for measuring risk for a single property,” says WaterStreet Company, which provides software and other services to property and casualty insurers.
Plus, insurers can adapt in terms of how they work together with customers. As Capgemini highlights, several insurers have been collaborating with clients to help them manage climate-related risk, thereby building engagement while potentially helping insurers reduce their own risk.
#3 IoT Devices Are Helping Insurers Improve Risk Management
Another important insurance industry trend that’s becoming more prevalent is the use of Internet of Things (IoT) devices to ultimately better manage risk.
“The rise of Internet of Things (IoT) sensors and telematics are providing insurers with more information to improve underwriting,” says McKinsey.
IoT devices may have been more aligned with other areas of insurance initially, but now commercial property and casualty insurance agencies can have use cases too.
As Capgemini explains, IoT “has enabled insurance firms to access real-time information. It started with adoption in personal auto, but these days firms that specialize in homeowners and commercial insurance also use IoT.”
From accessing real-time weather data to monitoring equipment performance, IoT devices can help commercial insurers understand how current conditions affect risk and potentially work with clients more proactively.
#4 APIs Are Enhancing Marketing and Customer Experience
Another developing insurance industry trend in the property and casualty space is the use of APIs to improve marketing and customer experience. APIs can have several uses, but some of the more notable ways they’re helping now are by:
Expanding quoting capabilities
InsurTech platforms like Wheelhouse use APIs to enable insurance agents and carriers to reach more customers through a self-serve application that allows for easy quote comparisons.
Allowing insurance agents to use chatbots to improve customer service efficiency; APIs can be used to add a chatbot to an insurer’s website, Facebook Messenger, and other channels without needing coding knowledge
Improved Social Media Marketing
Helping insurance agents improve social media marketing by streamlining conversation analysis; As IBM notes, “Among other things, you can combine Twitter feeds that reference your company name with your own analytics to help determine if you need to take action to rectify customer satisfaction issues or promote positive comments.”
#5 Insurers Are Expanding Outside Their Comfort Zones
Related to insurance industry trends around APIs and digital services, many property and casualty insurers are also realizing that there are opportunities to grow by stepping outside of the norm. Existing channels and ways of serving customers that have worked well in the past may not be enough as the world becomes more digital and customer expectations evolve. So, property and casualty insurers may need to step outside their comfort zones and start reaching customers in new channels.
“The small-business segment seems particularly primed for disruption, especially with the potential rise of partnership models with online retailers, manufacturers, and other noninsurance parties,” notes Deloitte.
With APIs, insurers can sell policies in more places than just traditional channels like their websites. It’s also increasingly possible to proactively try to cross-sell, such as by automatically suggesting complementary policies when a customer generates a quote online, rather than waiting until the client asks about it.
In addition to reaching customers in new channels, insurers also have to adapt in terms of how they operate due to the Covid-19 pandemic and the technology that they now use more frequently, such as to work remotely.
“Now, agencies are firmly out of their traditional comfort zone in a very positive way. There’s more openness to change and more curiosity — even excitement — about how emerging solutions can help agencies not only survive today but thrive in the future,” says Rick Fox, vice president at insurance software firm Vertafore, in a guest post on PropertyCasualty360.
What’s Next for Property and Casualty Insurance Industry Trends?
These five insurance industry trends will likely make a big impact on insurance carriers and agents, along with their customers in the coming years. But what other insurance industry trends will emerge?
From more insurance technology changes to new approaches that an insurance company might need to take to market to prospects, there are many areas that could further evolve in the coming years. Insurance agents and carriers need to keep a close eye on insurance industry trends so that they can optimize their internal operations, provide a great customer experience, and ultimately grow their businesses.
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