In a world that is struggling to balance itself due to the inertia of rapid change, one can only wonder, when a marvel of today turns into an artifact of the future. It is predicted that many of the industries, the jobs and businesses that run our today will become obsolete in the near future and make way for industries, jobs and businesses that have not yet been thought of.
But is this really a surprise? The answer is no! One thing human history has taught us is that change is the only constant.The sooner businesses embrace and accept it, the better the chances they have at staying relevant in the future. Insurance is one such sector that has been showing rapid growth (and change) in the emerging markets. It is predicted that by 2025 more than 25% growth of global insurance premium will come from emerging markets.
The challenge therein lies not only in satisfying the demand but figuring out how to cope with the change in the social attitude of the customer brought about by the advancement of technology.
Insurance in developing countries, is still at a nascent stage and has only begun its attempt at grasping technology. Insurers have recently realized the benefits of marrying technology with insurance and there is a whole lot of innovation happening in different industries that are yet to be introduced in the insurance sector. Four of the major technological innovations that will decide the success or failure of an insurer in the future are IOT, Blockchain, Big Data and Advanced Analytics.
To have an idea of what the Future of Insurance holds, let us have a look at each of them in detail.
Internet of Things (IOT)
One of the main innovations (if not ‘the’ main) in our recent history has been the internet. It has empowered us to do things which we could have only dreamt of two decades ago. Now, thanks to the Internet, we can transfer money anywhere in the world, apply to jobs, book tickets, explore a sea of data with only a touch of a button.
Though the internet has given us amazing abilities, our future holds far greater promise. Imagine a world where all our physical devices can work in tandem and we can remotely control our physical possessions from a different city! IOT devices are data creators, they create data which can be used for analysis, blockchain technology, etc. When devices interact we get a unique set of data and information. Imagine your IOT enabled phone is able to use information of your ticket bookings, number of co travelers and their relation to you and enables the travel insurer to suggest suitable travel insurance products to you via SMS on your mobile phone!
For more details on Internet of Things (IOT) visit the link below
Blockchain Technology
Blockchain is a technology that will define the way businesses are done in the future. It is a system created by a person (or group of persons) by the name of Satoshi Nakamoto. What it does is that, it removes the dependency on a third party in a transaction at the same time every transaction is recorded chronologically and available to everyone in the chain thus reducing fraud and increasing transparency and validity of the transaction. The term transaction here, applies to any transfer of value between A and B. Blockchain Technology will give the insurer an accurate measurement of risk, eliminate fraudulent claims, improve quality of customers, increase renewals and persistency.
For more details on Blockchain Technology visit the link below
Big Data
In our current day we are able to gather more and more data without understanding how to make use of it. Big data refers to huge data sets that are so large and complex that traditional data processing tools are inadequate to make sense of them. Though most organizations in the insurance sector in India do not have the capabilities (yet) to make use of this Big Data but they are sitting on top of a casket of gold, unfortunately a casket that they do not yet have a key to. Big data is the treasure of knowledge an insurer can bank upon to arrive at suitable products, risk models and customer segments amongst numerous other attributes.
For more details on Big Data visit the link below
Advanced Analytics
The best way to predict the future is to create it – Peter Drucker / Abraham Lincoln
To predict the direction of the business and make sense of it, analyzing data is of utmost importance. It can transform how insurers do business. Actuarial science has been at the forefront of predicting risk in the insurance industry and though they continue to be drivers of profit for the insurer, advanced analytics in insurance delve far beyond the boundaries of traditional risk prediction and actuarial science. An insurer who invests well in advanced analytics today will be at the cusp revolutionizing and leading the insurance industry into the future.
For more details on Advanced Analytics visit the link below
Now let us imagine life in this future that we have been constantly elaborating on.
What can a curious mixture of all the four bring about, what can happen?
- Based on the increase in the no. of valuable appliances inside your house, you will be notified of the increased sum assured being offered by the home insurance company at a reduced premium.
- Your health tracking wrist band will share your exercise routines with your life/health insurer and notify you of the premium rebate the insurer is offering in return for increased exercise.
- Your driving habits, average speed, no. of passengers in your vehicle will help determine your car insurance premium.
- From the insurer’s perspective you will have more recent and ready data that you can analyze and help serve your customers better. At the same time the availability of Big Data and Blockchain eliminates your risks and increases your profits.
These situations do seem like wishful thinking at the moment, but it might not be long before we start living in this world that we can barely imagine today!
Note: This article, Inventing the Future of Insurance has been published by Insurance Institute of India in their quarterly magazine.
