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The future of insurance: 3 disruptive trends to watch

The future of insurance: 3 disruptive trends to watch

From big data to virtual service delivery, new waves of competitive change are happening daily – and they’re driving disruption of the traditional insurance business model. How will they impact the future of insurance? And with so much at stake, where should risk managers focus? Here are three trends that top the list.

1. Virtual experience helping to improve risk management

Customers increasingly expect insurers to provide tailored risk management solutions. And thanks to digital’s dominance and 5G data mobility, traditional methods of interaction are giving way to newer, more efficient and ways for insurers to evaluate customers’ specific exposures and help mitigate risk.

From taking virtual “tours” of site locations to creating immersive online training to improve safety, these experiences are helping insurers collaborate with and better understand customers’ needs.  

Virtual experiences are also becoming key drivers in claims management. In fact, Lexis-Nexis Risk Solutions’ 2019 Future of Claims study found that 95% of insurers are either already using or considering virtual claims handling.

The key takeaway? Virtual experiences are changing risk management, making it easier for insurers to effectively assess and underwrite risks and engage with customers.

2. Shifting liability calls for new insurance products and tailored coverage

The widespread impacts of several technological, legal, and other trends are introducing new variables and shifting liability exposures. For instance, with the rise of the sharing economy, where does liability lie for accidents, breakdowns, or theft when cars are shared? And what about the use of autonomous vehicles, where there is no human driver to assign responsibility for an incident?

Answers to these types of questions present both challenges and opportunities for insurers, who are exploring and testing solutions that include:

  • Hybrid types of auto and product liability insurance; and
  • Real-time, per-trip micro insurance, based on variables like location, time of day, who or what’s driving the car, and whether the car’s being driven for commercial or personal use.

These trends will continue to grow, especially as the development of autonomous vehicles advances – powered in part by the rapid rise of 5G data technology. Self-driving cars require a continuous stream of data, and it’s forecast that 5G networks will be available globally within the next few years – with a significant impact in the automotive sector alone.

In fact, the 5G Automotive Association (the global network of companies from the automotive, technology, and telecommunications industries developing future mobility and transportation solutions) is pushing for the rollout of Cellular Vehicle-to-Everything (C-V2X) technology for some point in 2020 – technology that helps making roads safer while also laying the groundwork for fully automated vehicles.

What will the road ahead look like? Expect it to require a new way of assigning liability with new insurance products that address product liability issues, as well as dealing with emerging risks such as cybersecurity and data protection in tandem. Insurance is already becoming more episodic, with new forms of integrated all-in-one products and usage-based, on-demand coverages all entering the space.

3. Big data will change the underwriting equation

Automated underwriting via artificial intelligence (AI) will continue to vastly influence both risk assessment and product development.

AI and machine learning can help underwriters understand and act faster on emerging trends, identify operational issues, or visualize opportunities in real time – and evaluate risk more accurately. All these advanced capabilities promise better decision-making and faster processing through the insights that AI can leverage.

For example, consider a manufacturing facility where information from wearable-equipped employees and fleet telematics are connected to an actuarial database.  An underwriter could use this information, paired with automated access to a variety of third-party data sources, such as industry data and government records, to better evaluate a business’s risks and develop more tailored solutions.

By combining usage-based information and public data with proprietary insurance knowledge, technology is creating easier access to more reliable data streams – and that’s improving how risk is evaluated and how losses are managed.

Preparing for what’s next

As these game-changing trends continue to evolve, insurers and businesses must work together to reimagine risk management.

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.