Insurtech 2022 – Here’s what’s around the corner.
With modern technology comes the need to accelerate the use of data, adapting to digital natives and their expectations – swiftly moving open insurance to the top of the agenda for the industry. So what will 2022 have to offer in the area?
The past couple of years have been turbulent, not only for society at large but also for the insurance industry. Simultaneously, insurtech is growing more popular than ever before, creating a clear distinction between insurers who keep up with innovation and those who don’t.
At Insurely, we want to drive change and help transform the industry for the better. Although we expect many exciting revelations and progress in the year to come, some things will not be a surprise. Below, you’ll find our top predictions for the year ahead.
→ Trend 1: The digital universe is growing - creating risks and rewards.
Today, using the right technology in the right way is often a game-changer for all parties involved - and the digital world is growing fast, creating an ecosystem where the possibilities for insurtech are growing faster and faster. Competition in the market is likely to continue to grow, forcing the industry to rethink its offerings. Insurtech is vital for this; modernizing technology stacks to maximize benefit from IoT, data, and the cloud, and delivering personalization to customers through SaaS-based solutions built on APIs. On top of this, insurtech will develop new platforms and create microinsurance products to be plugged into other marketplaces and drive product simplicity.
Digitization has created new standards for a more aware and independent consumer. This forces insurance companies to re-evaluate their current customer relations, increasing focus on engagement and service. Digitally native customers demand personalized services based on their individual preferences, enhancing the customer relationship with the help of digital flows, reduced lead times, and automated administrative processes. However, it’s important to note that some challenges may come as well. For insurers, this could include managing risks around data security and privacy, as well as processing and storing data in strict accordance with consumer consent and legal frameworks. It’s important to always put the customers’ safety first and minimize the risk of data breaches and fraud. And so, insurance companies will not only start to deal with this increasingly technologically advanced world – but also the consumers living in it and the legal frameworks to live by.
→ Trend 2: Benefiting from big data.
Data is not what it used to be. Never before has it been as crucial to manage data the right way as it is now and as it will be in the future. Using effective, efficient, and enterprising solutions is key when building next-generation insurance experiences. At the same time, dealing with the GDPR and cybersecurity is complex. Luckily, in 2022, we’ll start seeing how insurance companies understand the solutions they need and the benefits from using them.
However, doing it the right way is important. Data protection and data ethics issues can arise with increased data sharing, making sensitive information accessible for third parties. Therefore, clear restrictions are needed for sharing data beyond the customer’s consent. One way of doing this, EIOPA (European Insurance and Occupational Pensions Authority), is stricter authorization methods through APIs. This provides more control of the type and quantity of data that is shared with third parties and gives customers a safe and ethical environment in which they have the right to control their data.
→ Trend 3: Open insurance - the new normal.
Historically, there has been a lot of secrecy around insurance data, making it hard for consumers to truly understand insurers’ products, policies, and prices. But with open insurance, this is not the case. Instead, it enables information sharing within the industry through accessing and sharing insurance-related data, usually via APIs, to create win-win insurance experiences.
For consumers, open insurance means many things: it creates a broader understanding of the insurance industry, generating informed decisions and increased loyalty through transparency. It initiates product and service development as a result of the new information available, encouraging consumers to compare the market and find the perfect fit for them. In practice, this could mean customized insurance offerings and policies related to specific events offered to the customer via an app. For example, travel policies when walking into an airport, detected by GPS technology, or health insurance products when reaching a certain age. Open insurance is the new normal - based on trust, understanding, and data.
For insurance companies, many benefits will arise. This includes increased efficiency enabled by reduced administrative and operational costs and facilitated digital sales processes with improved speed and flexibility. In addition, real-time data sharing allows for an efficient flow of information between insurers and their distribution network. Open insurance will also create better oversight of the distribution networks and products, enabling more robust handling of risk-control and making it easier to detect insurance fraud.