Instinctive Enterprise
Jan 23, 2020

The future of insurance: from premium collectors to lifelong protectors

Although the insurance industry is tightly regulated and risk-averse by nature, this is changing fast. The climate crisis, booming global populations, and explosions of data are intensifying risks and bringing new threats. To survive and thrive amid this disruption, the insurers of tomorrow need to move quickly. But how? We partnered with The Future Laboratory to produce the Insurance in the Age of Instinct report, which reveals the three trends that will impact us all, and how insurers will need to adapt to thrive in the future.

The trends redefining insurance

Over the next five to ten years, three global macrotrends will shape all industries. They will transform the role insurance plays in our lives and offer the opportunity for insures to shift from premium collectors to lifelong protectors.

1. Optimized reality
Presently, many insurers focus on customer experience, but only in the context of a single value chain. They're focused on selling, or policyholder servicing, or claims. In the future, those individual silos will merge into a single connected, data-driven experience in which insurers anticipate customer needs.

We can already see this starting to happen in the industry. Slice sells policies for people who rent their homes or rooms on a short-term basis. Drive Insurance offers protection for items that move, including cars, motorcycles, and all-terrain vehicles. Both companies focus on covering assets through a completely online experience.

What will optimized reality look like through a customer's eyes? Let's take Lucy, a hypothetical homeowner from San Francisco who rents out her house through Airbnb. All of Lucy's insurances run through various carriers with different premiums. But she doesn't know how it all works and doesn't need to know – her digital assistant manages everything. Every time someone rents her house through Airbnb, her premium automatically increases or decreases based on the renter's risk profile. And when they check in, that premium comes out of her bank account.

Lucy has also made a New Year's resolution to go for a run every morning and has stuck to it for three months. As she's coming back from a run, her health insurer texts saying, "Congratulations on sticking to your resolution! Your premium is going down by 2%." The underwriting and customer service value chains have integrated into a seamless experience that is in sync with Lucy's life. That's optimized reality.

2. Ethical impact
Today's customers expect businesses to care about more than their bottom line. For insurers, this means reimagining their role as the sector responsible for managing risk, with some insurers again leading the way.

Swiss Re has partnered with startup VanderSat to bring crop cover to those who it need it most. Instead of paying out when there's a 100% loss, Swiss Re is using satellite technology to predict a deficit in soil moisture as a predictive indicator of crop loss. This triggers an immediate claim payment long before a full loss even occurs. Imagine the difference this makes to policy owners with no loss of livelihood.

Some insurers are driving social change with ethical policies. QBE's Premiums4Good invests 25% of premiums in projects that help the environment or local communities. Imagine if the entire insurance industry followed QBE's lead. Imagine what could be achieved by 2025.

3. Whole-system planning
With businesses and communities facing systemic threats such as climate change and cyber-risks, insurers must adopt long-term, holistic approaches that build resilience against these threats.

We know what's happening with climate change. We know how much data insurers have access to. What if insurers connect the two to create a more sustainable future? A great example here is when AXA worked with Paris city officials in 2016 to simulate a rerun of the 1910 Great Flood. They discovered that if it had happened in 2016, 5 million people might have lost electricity, 41 metro stations might have gone out of service, and approximately $30 billion euros in damages might have accrued. Armed with this information, the government reinforced multiple systems to better deal with a flood of comparable magnitude. Insurers across the industry will need to use partnerships, investments, and technology to build planetary resilience to improve whole-system planning.

How will insurers survive and thrive in the future?

The next generation of insurers will be those that can act instinctively. They will connect data, knowledge, people, and insight from across their ecosystems to make fast, accurate decisions that benefit clients and customers.

Download the report to explore these trends and how insurers must transform.

About the author

Sasha  Sanyal

Sasha Sanyal

Global Business Leader, Insurance

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