Trends in Life Insurance - How Can the Industry Stay Fit for the Future?
Life insurers are facing a new world in which the nature of uncertainty itself is changing. The future is collapsing into the present faster than past data can be used to extrapolate the future. However, we shouldn’t be fearful. InsurTech (insurance technology) is alive with possibilities, so it’s about how we choose to engage with it.
The disruption coming to life insurance is a convergence of advances in different areas: personalized and precision medicine in healthcare; 3D printing in manufacturing, the Internet of Things, big data, and metadata (data about data) in the digital space. And that’s not all; increased access to capital is lowering barriers to entry and levelling the financial services' playing field that insurers have dominated for a 150 years.
There is good reason for concern that traditional life insurance models are at risk from new competitors unfettered by local regulation. New and agile players could feasibly short-circuit the industry’s entrenched business paradigms. It’s possible for a newcomer to arrive at any time with the scope to achieve solid scale simply by operating differently.
In the future people will engage with life insurers differently. We can predict that mecosystems - concepts that have the customer at the centre of everything - will drive a new model for life insurance. The re-emergence of mutuality, in the form of peer-to-peer insurance and social broking activities, is a good example.
Customers are increasingly better equipped to manage and collect their own health data. Self-monitoring using wearables and health apps is here to stay, and it’s already clear that people will share some personal data with their insurers if it provides the policyholders with an advantage. Soon more individuals will demand insurers move from one-size-fits-all solutions to unique ones based on a customer’s unique data.
Providers that knit themselves into the fabric of policyholders’ lives will provide them more of the services they demand. Artificial intelligence and machine learning will drive this, and for the moment insurers can propel this process forward. Better use of analytics will clarify buying triggers, provide granularity to the process of take-up and allow the industry to adjust life-staging models.
In addition to big data, behavioural economics will be used to influence how life insurance customers interact with and share their data. Harnessing that power means deploying the best of data-driven information to influence and nudge insured and previously uninsured individuals into buying.
Waves of continuous disruption can be expected and the time between them will shorten. While the rate of the industry’s response may vary, it’s important we stress test our readiness to adopt change as an ally by asking ourselves some key questions about our fitness for the future.