The year 2021 will go down in history as a watershed moment in the evolution of technology in a variety of fields. More than US$10.5 billion was poured into insurtechs globally in the first nine months of 2021 alone, according to the Willis Re Q3 Quarterly Insurtech report, with hopes that this investment trend will continue to expand in the future years.
Several driving forces are combining to propel unprecedented growth in new technology-enabled insurance business models, according to Bolttech. There is no turning back now that the global pandemic has accelerated digital change. Traditional insurance companies have little choice but to form agreements with insurtechs and acquire ecosystem connectedness in this environment.
Digital asset protection will be high
The world took note when Coinbase CEO Brian Armstrong suggested that the company’s new Non-Fungible Token (NFT) marketplace “may be as big as or greater” than its cryptocurrency business. The amount of traded NFTs increased in 2021, and we are only at the beginning of this digital asset class’s evolution.
Consumers and corporations clearly care about growing and maintaining their digital assets, perhaps even more than their physical assets. With the rising confidence and activity in digital assets, it will be necessary to preserve this new class of assets. Malicious assaults are equally as common on cryptocurrency exchanges and custodial services as they are on banks. Because they handle cash, bitcoin, and NFTs as a single asset, digital wallets will require enhanced security.
Distributed Operation and supporting services will bloom
Decentralization and blockchain do not give anyone the right to break the law. We’re seeing more progressive moves to welcome the innovation that decentralized finance (and specifically insurance) may provide as regulators acknowledge the necessity to govern the crypto markets. Many authorities and industry players now recognize that the only business models that can be sustained are those that are complying with the law.
Building these decentralized levels of trust, open sharing of risk data, removing inefficiencies, and creating new risk pools can all help to accelerate the expansion of decentralized insurance and protection. Most crypto exchange-traded tokens are associated with specific risks, providing unique inbuilt insurance opportunities and the ability to build risk pools. As a result, reinsurance can be fractionalized as an asset class. These are the kinds of opportunities that will spur the rise of decentralized insurance and protection, as well as the entry of non-traditional industry players.
Use of advanced Multimedia (Metaverse)
In essence, virtual, augmented, and mixed reality experiences are not new, despite the recent use of the phrase “metaverse.” However, thanks to the increasing convergence of cloud, VR/3D, 5G, modern game design technology, digital currency, tokenization, and e-commerce, the moment has come for this realm of immersive technology.
Disney, Nvidia, Microsoft, and Facebook (now Meta) are among the global entertainment and technology heavyweights that have already made significant investments in this area. Digital insurers, brokers, and exchanges, in particular, will begin looking for relevance and opportunity within this converging digital environment. While there is still a long way to go until the metaverse generates significant money, early adopters enjoy the advantage of becoming one of the primary distribution channels over time. They’ll document their findings, identify and comprehend a new audience, and test new goods while developing a presence.
Ignition of Internet of Behavior (IoB)
Automobiles are becoming self-driving and linked. IoT gadgets abound in today’s homes. Smartphones and wearables have become an inextricable part of our daily lives. The Internet of Behavior (IoB) refers to the data and insights that can be gleaned from a plethora of sensors, IoT devices, and telemetry that now surrounds us, offering useful information on consumer behavior such as live, play, and work.
Despite the ongoing debate over privacy issues and laws, these data streams are assisting businesses in accurately understanding, modeling, and predicting customer behavior. For insurers, this has far-reaching ramifications. The more data there is, the more precise AI and machine learning models can be. To stay competitive, it’s becoming increasingly necessary to directly synthesize and correlate various IoB data streams – whether structured or unstructured – to targeting, pricing, and underwriting choices. These data streams can be used to reinvent any standard insurance package.
Technology-enabled Insurers will be the solution for the customer care
The year 2022 will be remembered as the year when insurance took a huge step toward prevention and prediction. If you ask any insurer, exchange, or broker to characterize the most crucial customer journey points, you’ll hear phrases like “client onboarding,” “claims,” and “renewal,” or something similar.
However, as a whole, we are significantly lacking in proof points that demonstrate the continuing connection with our clients (perhaps with health, wellbeing, and lifestyle as the emerging exception). Nobody wants to get sick, have their home destroyed, or have their automobile crash. Despite the fact that the insurance sector has made significant progress in improving the claims experience, the best claim experience of all is not having to make one.
Customers today, on the other hand, will grant authorization for the use of their data in numerous situations if the benefit outweighs the risk. They may consent to alerts and notifications if they believe their information is being used to assist them to prevent negative situations in their lives.
The increased availability and sophistication of data to forecast and prevent these negative events indicates that the insurance business is now capable of developing regular and valued contacts with customers to create better results for all.
Cyber security moves beyond insurance
Cyber and identity-protection insurance are more commonly associated with businesses; consumer demand has risen as well. However, as most research indicates, there is much more that insurers, banks, and other industry participants can do beyond insurance to educate, advise, and assist clients in protecting themselves.
Because nearly every activity is connected to the internet, the cyber defense appears to be one of the most basic demands of businesses and consumers, given the increasing sophistication of attacks and threat vectors.
The hazards are increasing at an exponential rate, while most firms and consumers lack the information, advice, and tools necessary to avert an attack or loss. Cyber security will be the next frontier for insurers, insurtechs, tech businesses, security, surveillance services, governments, and regulators to collaborate on. In this domain, 2022 will be the year when new goods and business strategies emerge.
The hybrid insurance (Virtual and Physical) agent will increase
Because of the pandemic’s ongoing lockdowns and restrictions, many insurance agents have turned to video engagement out of necessity. Traditional agencies may believe that video conversations are a poor substitute for face-to-face interaction, but video-based client engagement is here to stay.
The new hybrid agency and agent-based distribution model will be able to take advantage of a wide range of digital services to support and complement face-to-face interactions, video, and the growing use of virtual and hybrid reality.
Expect to see AI-assisted recommendations, visualizations, modeling, and scenario planning given straight to the customer’s preferred channel in the near future.
Use of APIs to “just add insurance”
For any company with a huge customer base, finding new ways to generate extra revenue streams is a top responsibility. According to Google’s latest State of the API Economy report, some of the top API platform goals include faster application development, application connection, developer ecosystems, B2B collaboration models, and monetization.
In a world where there is an API for almost everything, insurers are quickly embracing API use. The emergence of insurtechs, nimbler MGAs, and brokers have accelerated the development of carrier/product APIs. APIs are increasingly a prerequisite for firms to engage in new exchanges, as well as for ecosystems to integrate insurance into customer journeys.
David Lynch – Group CTO, bolttech