You might laugh at the mention of it, but the lightning speed at which Pokémon Go accident insurance policies were developed in 2016 within days and weeks of the release of the popular game app, shows how the so-called ‘laggard’ insurance industry is the equal of any when it comes to flexibility and capability.
Insurers should continue to react and even preempt the need for policies like these, and taking stock of disruptors is the first step in managing these expectations.
Here are a few of the major changes already under way in the insurance space.
1. Wearables: data collection and ownership
Quick: are you wearing an Apple watch? What’s your heart rate right now? How many steps have you done today?
Today, it’s steps, sweat, and sleep right there on your wrist: tomorrow, it could be a pill filled with nanotechnology, with diagnostic robots the size of blood cells to measure your body chemistry, detect internal disease, and check if you’re keeping up with your medication and if it’s doing you any good.
Such technology offers opportunities for health insurers to better assess risk and set policies and pricing based on individual data. Legislation is still catching up on who owns the data collected by our smart devices and wearables.
2. AI: smart tech and machine learning
Siri and Alexa are here to stay, and they’re getting smarter all the time. Artificial intelligence underwriting and artificial intelligence claims settlement will disrupt the insurance industry, plain and simple.
AI can recognise patterns in vast amounts of data, reduce the time spent on menial work from months to minutes, and augment insurer’s individual capabilities, if that insurer is able to rise to the occasion.
With AI in the workforce, both new and old members of the industry will need to adapt to a shift in skills and utilise all the tools available to them.
3. The sharing economy and customer culture
The sharing economy, also known as the ‘gig’ economy and the ‘on-demand’ economy, isn’t something often associated with insurance. But when you consider the potential risk inherent in ride-sharing (Uber, Lyft), house sharing (Airbnb), drone delivery (Amazon, Eagle Boys), service platforms (Taskrabbit, Hey You), independent goods sharing (eBay, Etsy), and crowdfunding (Kickstarter, Gofundme) it becomes obvious that insurance will be involved in the sharing economy.
With Airbnb, for example, shared homes can be used for destructive parties over the summer months, and legislation has not yet evolved to make sense of this kind of ownership and who is responsible for the damage.
Time Magazine revealed in a poll that people are neatly split between those who favour more governmental regulation for the sharing economy and those who oppose it. As the sharing economy evolves and changes, there will be numerous opportunities for insurance companies to get involved, if they can conceive of a way.
4. New business models: blockchain and startups
Blockchain. I’m sure you’ve seen the term. At its core is the concept of a chain of trusted transactions (or blocks) between person A and person B, or organizations A and B.
Blockchain’s ability to send, receive, confirm and store information in real time has the potential to change the way the insurance industry processes data and transactions. It gives rise to a new kind of ‘digital trust’ with transparency and efficiency between insurer and client. It opens the door to innovations like peer-to-peer and micro insurance, as well as parametric insurance.
Startups that constantly produce and master new technology will be able to take advantage of applications like blockchain and its smart contracts, crowdfunding, transparent auditing, and extensive and accessible digital file storage. Innovation labs are a key investment for big insurers these days, and it’s going to be fascinating to see what comes out of the increasing partnerships between startups and traditionals.
5. Millennials in the insurance industry
Customers continue to feel a sense of mistrust with general insurers, says Scott Guse at KPMG, and “doing nothing is not an option”, unless insurers want their clients using the market to find what they want elsewhere.
The culture of the insurance industry overall will soon undergo a dramatic shift, anyway: looking back at that Insurance Information Institute report, they predict 400,000 job openings in the insurance industry by 2020 that will need to be filled, “mostly by millennials”.
The insurance industry on the whole right now is, on average, older than other industries, and the number of insurance professionals over 55 has risen 74% during the past 10 years. Millennials don’t appear to want to work in insurance, and when it comes to their own insurance needs, they are the least likely to be actively engaged with insurers.
Yet as time marches on, they will by necessity become the most prevalent generation in the insurance workplace as insurers and customers – and they will change the industry to suit their needs.
So what does it all mean? What will the insurance industry look like ten years from now - or five years - or even one year? We’re starting to change what insurance looks like on both sides of the computer screen, improving what insurers and customers both see and want seen. If you’re open to learning new things, to new discoveries and partnerships, then it’s a thrilling time to be in the insurance industry.
If you are inspired and would like to join the revolutionary movement that Imalia is creating, you can request to join our Facebook group The Wolfpack, to share ideas and learn from other like-minded women.
This is an edited version of a blog that first appeared on LinkedIn.