A game-changing course correction that will redefine “business as usual” is already underway in the USD 5 trillion global insurance market1.
A new generation of customers, data, automation, and artificial intelligence (AI) is driving a “digital first” urgency that is sweeping the globe (AI). Let’s examine the major trends influencing the insurance sector and how digital technologies are bringing about permanent change. The path ahead, which leads to 2023, could prove to be significant for a set of trends in the aftermath of COVID almost leaving the equation.
The five most significant P&C trends identified are as follows:
- The changing job market and how it continues to affect car sales, traffic, and how bad accidents are.
- ADAS and its impact on CVT (connected vehicle technologies)
- RPA and Artificial Intelligence’s Impact
- Climate change and how it will become an important factor in the future for insurance risk and rules.
- New customer expectations in our on-demand, need-it-now world
- A holdover from 2021: increasing complexity due to the fact that all of these things are still upsetting the status quo.
The Changing Work Landscape
Let’s look at the changing work landscape and its impact on auto sales, travel, and accident severity.
According to a survey by Workplace.com, 37% of U.S. employees have shown an interest in working remotely this year. Many people purchased their first automobile in 2020 due to the evolving nature of labor and the money federal help injected into the economy.
Between August and October 2020, new car registrations in New York City alone increased by 37%. It is anticipated that this year’s U.S. vehicle sales would increase from 15 million to 15.7 million, with low inventories restricting demand while strengthening pricing power. Both indicate that the car sector is in a solid recovery.
Unprecedented drops in the number of miles traveled occurred between 2020 and 2021. The new omicron variety, along with inflation, is the major uncertainty when predicting traffic volume in 2022. Miles driven through September are still falling 5% from 2019 according to official statistics. In 2022, it is expected that the number of miles traveled will increase, although driving patterns will change.
The Growth of ADAS
According to Sam Tabak, the director of business development at MySpace NYC, a market maker in borough real estate and philanthropist at RMBH Charities; “There is a rise in the total number of cars and trucks with linked and ADAS systems. MarketWatch research indicates that the market for ADAS is expected to grow significantly between 2022 and 2027. Recent reports from OEMs show that almost 80% of vehicles bought in the U.S. between September 1, 2020, and August 31, 2021, had automatic emergency braking.
A key component of the right-to-repair legislation currently being considered in the courts is access to connected automobile data.
The NHTS Administration is interested in finding out more about how semi-autonomous features impact driving in actual situations because more vehicles are now equipped with them. Last year, they issued a standing general order that tells OEMs and other companies what they need to do to meet reporting requirements.”
Artificial Intelligence and Robotic Process Automation
According to Jean Will, co-founder and CEO of bridesmaid brand Cicinia: “Due to the development of AI algorithms, greater data processing capabilities, and novel data channels, robotic process automation (RPA) and artificial intelligence (AI) will take center stage in the insurance industry.
For instance, Lemonade, an insurTech startup, uses AI and behavioral economics as the foundation of its business strategy. AI gets rid of brokers and paperwork, and its behavioral economics features to cut down on fraud, saving time, effort, and money.
Tyche, another InsurTech company, has used an AI-powered claim likelihood model in underwriting to more accurately assess risks and make more money.
In order to automate policy servicing and claims administration for quicker and more individualized client care, bots will spread across both the front and back offices. For instance, the virtual assistant of well-known car insurance in the US responds to consumer questions about plans and payments.
Jim, a claims bot for Lemonade, evaluates and settles property claims in only three seconds. SPIXII, an automated insurance agent, communicates with clients using a mobile app and other messaging services to assist in the selection of the best plans.
Business outcomes in cost optimization, operational efficiency, customer experience, market competitiveness, and new business models will be significantly impacted and improved by AI and automation.”
Rhett Stubbendeck, owner and insurance expert at LeverageRx believes that; “An important trend is climate change. Because of the increasing frequency and intensity of extreme weather events, the property and casualty insurance sector has been among the first to suffer the consequences of global warming. A more frequent occurrence of catastrophes, coupled with a tightening of rules, might have a negative impact on business models, driving up prices for consumers and making it hard for insurers to cover certain risks”
Changing Customer Expectations
Next are the changing expectations of customers, who now expect digital, mobile, and personalized experiences.
There is space for improvement in the claims experience, according to a new survey of P&C insurance consumers performed by JD Powers, despite the industry’s heavy investment in back-end technology like straight-through processing. Despite the availability of the necessary technology, the research suggests that widespread implementation may be difficult.
According to Sam Underwood, insurance expert and founder of Bingo Card Creator; “The final trend is increasing complexity. Additional advanced driver assistance systems (ADAS) and other automotive technologies will be introduced, along with more data and new, innovative competitors in the next year. Technology and interconnected systems will continue to be used in 2022 to streamline operations, improve throughput, and delight consumers.
P2P insurance, microinsurance, and adaptable insurance plans will all be viable options in the future. Digital brands will get direct risk capital backing from reinsurers, and regulatory frameworks will facilitate more compact value chains.
Lifestyle applications will reinvent the interactions between insurers and insureds. Application Programming Interfaces (APIs), which combine data from many sources, will make it possible to develop services that are driven by insights.
A better understanding of how people act will lead to more accurate risk assessments, custom premiums, and long-term value. This will make customers happier and more loyal to the brand, and it will also cut down on fraudulent claims.”