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Today, customer demand for insurance products is at an all-time high, partially due to the COVID-19 pandemic highlighting the need for mortality protection. The industry is positioned to fulfill customer needs and enable growth; here are seven trends that could transform the industry in the coming years.
Personalised Health Management
COVID-19 has spurred greater interest in life insurance. However, this is not likely to change the long-term decline of mortality risk. So, life insurance companies would benefit from targeted health management. Companies’ insurance software can deliver timed, personalised reminders about diet, doctor appointments, and physical activity. They could also send local health resources to help in disease management.
Technology will aid in the transition—connected devices and wearables can provide insurance companies with data to ensure customer health. Customers are more willing to exchange data for personalisation today, so a shift toward “prescribe and prevent” and away from “assess and service” is highly probable.
Evolution toward Continuous Underwriting
At present, mortality underwriting has two main data gaps. First, it is constrained to information in the initial sale, and the only data available at that point is customer behaviour and past morbidity. Second, it does not account for lifestyle changes. There is a push in the insurance industry to automate the underwriting process, which will reduce inconsistencies.
Some companies have shifted to accelerated underwriting, which results in near auto-issuance for most policies. One could expect micro-segmented, personalised offers generated from comprehensive data sets about the customers in the future.
Personalised Customer Journeys
Life insurance companies will also engage in multi-channel customer interactions that promote cross-selling. Personalised journeys like these are possible with customised financial software development. With custom apps or platforms, customers might see pages that display the “next product to buy” or “you might be interested in” offers, and companies could use these spaces to reach out to customers likely to lapse. This level of personalisation can reduce acquisition costs, generate new premiums, and reduce customer churn.
Offerings Based on Customer’s Life Stage
Offerings that allow the customer to adjust their coverage are starting to gain popularity in other countries, and one can expect it to become popular locally. For instance, a Japanese insurer providing flexible protection enables customers to add or reduce their coverage. The plan covers medical, asset accumulation, and protection against dread disease and mortality, so clients have the chance to shape their insurance plans based on their needs.
Inclusion of Non-monetary Benefits
Product innovation in the next decade will likely enable pure wealth and asset managers to compete with life insurance companies. A company that wants to differentiate itself will have to provide non-monetary benefits or value-added services.
For example, companies can replace financial payouts with placements in senior living communities. Today, some companies already offer support for telemedicine, health management, and medical visits. It is possible for companies to partner with ride-sharing providers and hotels for related offerings in the future.
Interpersonal Skills Take Centre Stage
Digitally savvy workers with interpersonal skills will be valuable in the insurance industry. Since automation is poised to take over many rote and repetitive tasks, employees will take on more customer-facing roles. Companies with employees that lead with empathy will be more suited to help consumers deal with their coverage needs. Upskilling and reskilling employees to “future-proof” the industry is fast becoming a necessity.
Precision Mergers and Acquisitions
Insurance companies will find it challenging to keep expanding in existing markets. They could find more growth through acquisitions in new geographies. Cross-border transactions enable access to emerging markets, like those in Asia, or faster-growing developing ones, like those in Latin America. The global middle class, projected to have six billion people by 2030, is especially interested in asset management solutions, making strategic M&A’s a must for insurance companies.
The insurance industry, just like other industries, needs to evolve and adapt to consumer needs. Trends like the ones mentioned above are potential areas for growth—companies should be thinking of how to leverage these realities in their strategic plans.
Trust Informatics with your insurance software needs. We provide end-to-end software solutions and systems for insurance companies, helping them provide timely, customer-centric decisions. We also specialise in banking system software and infrastructure solutions; contact us today for enquiries!
Written by Daniele Paoletti