Tech has continued to advance at an astonishing rate allowing for customers to become both more knowledgeable and interactive with their insurance provider. If the client sees that that insurance provider offers no tailored customer service experience to fit their life or that they are not innovating their services as needed to handle 2020’s new challenges well, they will simply go online to look for another policy provider.
As a result of the added competition, customer retention and cost optimization are critical for businesses to stay afloat in 2020 and beyond. Below are some of the top challenges the insurance industry is going to have to face.
1. Evolution Of Automobiles And Transportation
The insurance industry has already started to face a huge disruptor in their transportation sector. Many driving and transportation trends are greatly affecting the insurance industry. These changes are transforming the landscape of the industry, reducing the size of the market and eroding premiums.
•Ridesharing- Ridesharing is one of the biggest challenges insurance companies are facing in the coming years. Obtaining insurance as a rideshare driver falls a bit in a gray area because they use their personal vehicles for business and pleasure. Getting extra car insurance to cover them is not that simple because they are considered independent contractors. Insurance companies need to spend time researching the market to find ways to bridge the gap these types of insurance policies offer so drivers and their passengers will have better protection.
•Autonomous Vehicles- Many car manufacturers are beginning to implement self-driving features into their vehicles. If an accident occurs while the car is self-driving, the fault of the accident falls into a gray area. For now, the fault typically lies with the manufacturer for a claim. In the future, insurance companies need to face the challenge of getting manufacturers to add detection modules that let them know if the accident was the fault of the driver or the autonomous system itself.
2. Machine Learning
More insurance companies are looking to use machine learning and automation tools to make their workflow more efficient. From claims processing and marketing to underwriting and fraud management, the benefits of automation are many. Machine learning has been in the industry for years doing simple tasks such as compliance checks, data entry, basic customer service communication and rule-based decision making. With advancements in the capabilities of these machine learning systems, insurance companies are able to automate more complex duties such as personalized customer interactions, claims processing, collecting customer insights and property assessments.
Cybersecurity is another trend and challenge that many companies are facing in the insurance industry. It is a big challenge insurance companies are having to look at from the perspective of their clients and from within. Risk management is something insurance providers have to worry about on a daily basis. However, many are behind in terms of setting up cyber precautions when compared with other financial sectors. Cybersecurity is going to change the landscape of the industry as more people are under the risk of their personal digital information being hacked.
4. Insurance Premium Personalization
Another emerging trend and challenge are clients wanting a higher level of personalization with their insurance premiums. Customers are exposed to a multitude of products that don’t match their specific needs. Oftentimes, they will be paying for features in their policy that don’t affect them. Customers expect their insurance providers to treat them as individuals and meet their personal needs. To offer this level of personalization for their clients, insurance providers will need to have a strong foundation established to research data insights. They would also need more information on behavioral insights to get a deeper client view.
The insurance industry has always been a competitive market place. In order to stay competitive in our ever quickening world, they face multiple issues from the tech industry’s advancement, like the ability for consumers to shop around and be education, their expectation for extreme personalization, and their ability to blur private and cooperate business opportunities with a click of an app button.