4 Major Trends for Tomorrow's Insurance

Intelligent systems will draw customers' attention to risks, point out countermeasures and help prevent damage in the first place.

Self-learning machines and intelligent sensors will radically change the insurance industry of tomorrow. Insurance companies will only be able to tap into the full potential of digitization if they abandon their old processes and ways of thinking. Here are four theses on how the insurance of the future will differ from the insurance of today. Tomorrow's insurance is digital More and more people in Germany are online today; and this behavior is also reflected in customers' expectations of insurers. The days when printed insurance documents filled entire filing cabinets are over. Rather, today's customers expect to be able to access information and services anywhere, anytime and at the touch of a button. More and more insurers are relying on online sales channels, chatbots and digital language assistants to help customers 24 hours a day. Insurtechs are one step further: They already offer insurance products that are completely operated via smartphone. Claims can be easily reported via app and data, and insurance coverage can be changed and managed in real time. Standardized cases can already be processed automatically - with payments often on the insured person's account 24 hours later. This trend will continue. Simple claims will then be settled within minutes; For complicated claims, it will be possible to check the status online - just as customers can conveniently track parcel delivery via smartphone. In this way, customers will benefit from a vastly improved insurance experience. Tomorrow's insurance is data-driven Companies such as Amazon, Google and Netflix are proving that data is the currency of the future. Those who know the needs and behavior of their customers can offer better products and services. Insurance companies also have an important peculiarity: The product itself is based on probability calculations and empirical values, i.e. on data. Until now, tariffs have generally been calculated on the basis of a small amount of data, usually older data. However, the more data an insurer has on the life situation and behavior of its customers, the more it can refine risk profiles, reduce the fraud rate and adjust prices in a targeted manner. In short: If you have more data, you can change the core of the product. See also: How Robotics Will Transform Claims   This benefits not only insurers but also customers. Those who pay their bills on time and are classified as trustworthy on the basis of certain criteria could receive cheaper premiums and have their claims reimbursed quickly and easily. The conclusion of a contract itself is also massively simplified by data. Anyone taking out life or disability insurance usually has to answer a long list of questions. Providers are already experimenting with so-called Smart Underwriting. Applicants are asked a few basic questions and a few supplementary questions tailored to their individual needs. The result: Clients without health restrictions can complete the risk assessment in just a few minutes; the others receive in-depth questions based on their information. All in all, the entire risk assessment process is faster. The insurance of tomorrow is forward-looking The insurance of tomorrow will not only regulate damage but will not even allow it to occur. With improved data, it will not only be possible to calculate the probability and amount of loss more precisely. Possible damage can also be prevented by digital systems and sensors. In industry, this is referred to as predictive maintenance. The principle is simple: Technical systems are maintained and repaired in such a way that expensive production down times do not occur in the first place. Predictive maintenance is not new -- the wear and tear of components or machines could already be predicted well in the past. However, digital systems analyze machine functions and production processes in real time and immediately detect errors or deviations. This approach can also be used for private risks. Sensors on the washing machine report as soon as water escapes. Intelligent smoke detectors automatically alert the fire brigade. The evaluation of weather data could help to warn people of storms or natural disasters in time to protect travelers from dangers. In addition, the insurer could try to reward customer behavior that counteracts certain risks. Some health insurers, for example, reward a healthy lifestyle and subsidize preventive measures such as sports or vaccinations. Telematics tariffs in motor vehicle insurance are already moving in this direction by promoting a prudent driving style. See also: Pricing Right in Life Insurance   The insurance of tomorrow is holistic Thanks to digitalization, it is also possible to develop offers that are better-suited to customer needs - away from standardized and inflexible policies. If the insurer can better assess the customer's needs on the basis of the customer's history or behavior, it is in a position to put together tailor-made insurance packages. In the long term, insurance will therefore become increasingly holistic: While in Germany every resident over the age of 18 has an average of six insurance policies, in the future people will only have one risk partner covering all the risks in an individual policy. Just as people nowadays put together their breakfast individually in a restaurant, they will also choose their insurance cover from various modules. A father of a family who like to holiday on the North Sea and go mountain biking would then have a different service package than a father of a family who prefer to holiday in the Mediterranean and climb once a year in the Alps. Conclusion: From a guide folder to a smart insurance app Tomorrow's insurance will be a digital companion that understands customers and their needs. Digital use via smartphone and personalized insurance cover will become the norm. Intelligent digital systems will draw customers' attention to risks, point out suitable countermeasures and help prevent damage in the first place. And if the customer's life situation changes, the insurance cover will adapt automatically -- without the need for any human intervention.

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