The unfortunate and sudden outbreak of the Coronavirus pandemic caused a significant negative impact on almost every industry. Even the most dynamic economies of the world faced recession, loss of finances, as well as human lives.
People exhausted all their lifelong savings and cushion funds. They lost their premium paying capacities. Hence, the insurance industry saw a dramatic fall in the year 2020. However, since the insurance sector is quite dynamic and prone to risks, it has to bear, cope, and grow from the situations thrown at it by the pandemic.
The positive news is, the insurance market is all set to boom in the post COVID times, says research.
The integration of new and modern technologies like blockchain for fast-track claims are benefiting the insurance processes. Plus, businesses are starting to normalize their operations, promoting a regular money flow in the market, having an undoubtedly positive impact on the insurance sector.
In this article, we talk about the biggest insurance trends to watch out for in the year 2021.
Customized Policy Plans Will Leverage the Power of Big-Data
The insurance industry is all about numbers and data. If you have more data to analyze, then the insurance companies will be able to design and create more customized and sustainable policy plans for a larger pool of audience. For the one receiving insurance, if they are getting customized policy plans, then they can enjoy low risks investments.
Hence, the coming year will allow the insurance professionals to leverage the use of big data analytics to get legit insights.
In the year 2021, the insurers are going to utilize big data to access the risk involved along with the calculations of the premiums. This trend is going to work in favor of the insurers because of low-risk, lower premiums, and smooth and guaranteed returns.
Global Insurance Premiums Will Rebound to Pre-Crisis Levels
The car insurance rates in the US were higher than ever in 2020 and the trend is not going to slow down in 2021. The insurance industry is likely to absorb COVID-19 shock. The pandemic has sparked an improvement in general risk awareness, which will support growth for the insurance industry over the long term.
Swiss Re forecasts in its latest sigma report that global insurance premium volume will rebound to pre-crisis levels by the end of 2021. The global insurance premium is expected to grow by 3.4% in real terms in 2021, after contracting an estimated 1.4% in 2020.
The report also shows that combined life and non-life direct premiums written will recover to above pre-pandemic levels by 2021. As per the estimations, the global P&C insurance sector premium growth and life insurance total premium volumes in advanced markets will show positive growth of more than 2% in 2021.
Another reason for the estimated growth of the insurance markets is the increase in prices. Several lines, including credit, surety, and liability, are expected to experience higher claims in 2021. Thus, increasing claims tend to trigger higher rates.
Therefore, a strong V-shaped recovery in insurance premiums is expected in 2021.
Extended Reality Will Be Used to Serve Different Business Needs
Extended Reality is a term used for a mix of several immersive technologies such as Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR).
Here are a few ways how Extended Reality will be used by insurance companies:
- With the use of Augmented Reality, the investigators will now be able to assess the potential risk by framing and reading a 3D image, without having to visit the site. The concept is still under testing but is expected to be launched by 2021.
- Similarly, AR can also be used to explain the insurance plans to the customers.
- A mix of immersive technologies can be used to improve the effectiveness of advertisement campaigns.
- AR apps can be used to offer remote guidance and employee training.
- Extended Reality will bring innovative ideas and allow the insurance companies to approach the customers at their full capacity using real-time, engaging, and informative content.
Blockchain Technology Will Act as a Catalyst for Growth
The insurance sector has to work towards keeping transactions and personal and banking details of customers safe from undesirable and unforeseen attacks.
In 2021, 100% of insurers reported that are planning to integrate blockchain into their production systems.
The introduction of blockchain technology will make processes more secure. It can be used to create self-executing smart contracts and to update the conditions as well as track the status of claims. Introduction of blockchain will facilitate excellent transparency for the customers and hassle-free work for the insurers.
Tailored Products Will Increases Policy Sales Probability to Millennials
Millennials, individuals in their 20s and 30s, are now one of the biggest population group says a report by Pew Research Center. They expect more product personalization and customer engagement.
Therefore, there is a need for innovative and personalized insurance products to meet the expectations of the young customer base. Insurance companies can leverage technology to develop personalized products tailored to their customer’s lifestyles.
Application Programming Interfaces integrate data from multiple sources and enable the creation of insight-driven offerings. It leads to a deeper understanding of customer behaviors, which, in turn, results in more accurate risk assessments, personalized premiums, and value for better customer experience and brand loyalty.
Simple ways to personalize insurance products include pulling in data from IoT devices such as wearable fitness trackers and car telematics. It will provide better value on insurance products to younger customers.
There are quite a few drawbacks in the industry of insurance products which need to be addressed in the year 2021. With the introduction of technical advancements, the downsides of the insurance industry will be remedied, compelling more people to get themselves and their family insured.
These trends indicate how new value worth billions can be created for the insurance industry. However, the key is to understand how and when to tap into these trends and new technologies.