Throughout 2022, insurtechs and progressive insurers have continued to fill gaps in the protection needs of customers, through both traditional and emerging decentralised models. As the insurance landscape evolves further in 2023, new driving forces will converge with other recent trends. Early movers that embrace these trends will have the opportunity to help the industry make another giant leap forward.
Here are my predictions for the top six trends to watch in 2023:
1. AI and IoT-driven real-time prevention
As an industry, we’ve been obsessed with studying historical data - from catastrophic events and unforeseen losses to claims history. We employ some of the most brilliant actuarial minds to synthesise and make sense of this data for decision-making. However, there is much more to do to keep pace with the rise of real-time data streams from sensors, IoT devices, wearable technology and the exponential increase in structured and unstructured data.
There is great potential in using real-time data to prevent the adverse events that trigger claims from ever occurring. In 2023, we are going to see an acceleration in the use of real-time data to predict, prompt, nudge and most importantly, prevent. A step increase in claims prevention is one of the single, most profound impacts modern technology, combined with insurance expertise, will have on humanity.
2. Autonomous choice for insurance
Until recently, it would be unthinkable for customers to use an AI or an AI-augmented agent to choose their policy. Fast-forward to today, we are seeing rapid developments in enabling autonomous choice for insurance. API ecosystems are unlocking easier access to a spectrum of protection products and data sources. AI trained to synthesise these products and data sources, combined with a digital power of attorney where needed, will enable agents, brokers and exchanges to build trust in AI to make the right choices on coverage needs.
3. Data marketplaces and ecosystems to thrive
In recent years, companies such as Amazon Web Services and Google Cloud have launched their own data marketplaces. Insurers, such as Chubb and Zurich, have also entered the incredibly active API marketplace space. Some players have chosen to take the closed proprietary path, some the aggregation pathway, and others the open API-first marketplace strategy.
No matter which path it may be, what stands out here is the opportunity for faster connectivity and wider access to distribution, improved data-driven decision making, creating and enriching machine learning models and finding ways to leverage and monetise data. As the world’s leading stock exchanges generate massive returns from market data, the insurance industry too can replicate these types of returns and forge partnerships that can take advantage of such diverse and valuable proprietary, third-party, or open datasets.
4. Insurance wallets evolve further around customer needs
While policy documents are easily accessible through emails, cloud storage, or via the carrier’s app, standalone and embedded policy wallets are emerging as a way to help customers manage their protection needs and drive increased engagement - whether it is for knowing your specific coverage; being reminded for renewals; or being prompted to take actions to avoid loss events. The reality is that most consumers and businesses today keep a portfolio of policies across multiple carriers and distributors (insurance and non-insurance) and what they crave is something much simpler to manage all of this complexity.
5. Hardware embedded insurance
In 2022, Accenture published an article on the evolution of embedded insurance, suggesting that we are now at “Version 2.5”. This version of embedded allows customers to purchase insurance alongside “digital” products like concert or plane tickets. Being at the early growth stage of embedded, there are many more applications, meaning an immense opportunity for insurers and insurtechs, and increasingly for hardware manufacturers as a result of the convergence of multiple technologies.
With many industries developing immutable chain of custody solutions powered by blockchains, attaching insurance to hardware and operating systems will emerge, and this coverage, like warranties, can be better matched to the expected lifetime and usage of certain assets.
6. Embedded insurance meets the Metaverse
Some industry participants have dipped their toes in the metaverse in 2022 and their attempts were mostly viewed with a sceptical eye. Most are adopting a cautious approach, preferring to wait and see which brands and business models in which metaverse(s) will end up gaining traction – rather than experimenting themselves.
Although Meta may have shouldered the most intense scrutiny given its colossal investments in the space, let's not forget the other players – The Sandbox, Decentraland, Roblox, and Fortnite. We’ve seen financial services companies entering the metaverse for branding, staff engagement, and creating virtual store concepts. It’s only a matter of time before we see advisory, sales, and servicing transition into these immersive digital spaces, with insurance and protection driving traffic and engagement.
While the insurance industry has been seen as a laggard when it comes to technology adoption, we are entering a new era of accelerated innovation. Macro level technological developments in adjacent industries and the entry of non-insurance tech companies are poised to transform the industry and create greater competition.
However, insurtechs, insurers and non-insurance businesses can collaborate as much as they compete. Close partnerships, coupled with the adoption of emerging technologies, will be key to increasing the pace of advancement in the insurance industry as a whole.
This article was first published on InsuranceAsia News: https://insuranceasianews.com/six-technology-trends-shaping-the-insurance-industry-in-2023/