Main trends that are making insurers shift to risks prevention

The two main trends that are making insurers shift to prevention are the growing complexity of risks society faces, and the ever-increasing availability of data and artificial intelligence tools.

A move towards prevention through predictive technologies will become commonplace in certain insurance sectors.

AI, data and a digital insurance ecosystem could have many potential benefits and applications, from automobile accidents to the reduction of crop loss through efficient resource allocation.

In recent years, more of their clients are talking about the importance of prevention, and their expectation for their insurer to be able to help them mitigate risks in their business, no matter the industry.

But the most powerful application of a digital insurance ecosystem according to Desvaux, is against technology risks.

Many new risks emerge, as the industry evolves, such as increased severity of nat cat on physical assets, or cyber security on the ever-increasing digital part of the economy.

To protect these, we need risk transfer but more importantly prevention to reduce the risks and severity of claims, thus fulfilling our role as partners.

There is also an opportunity for AI and similar technology to help identify vulnerabilities in global supply chains or similar complex systems and mitigate issues like the global supply chain interruption caused by the pandemic.

The aim is to move beyond “simple” risk management and prevention toward societal benefits, whether that is to anticipate the locations of wildfires or floods, to help build communities that are more strategically resilient to climate change, or to provide real-time, targeted services in emerging or precarious markets to bolster their financial stability.

The USD 5 Trillion global insurance market is in the midst of a game-changing course correction that will re-define ‘business as usual.’

A ‘digital first’ urgency is sweeping across the landscape, driven by a new generation of consumers, data, automation and Artificial Intelligence (AI).

The digital economy will make usage-based, on-demand and ‘all-in-one’ insurance lifestyle products more relevant. Customers will prefer personalized insurance covers instead of the one-size-fits-all products currently available.

Today, more than 80% of the premiums collected by insurers is lost to distribution costs. Digital models will make intermediaries in the insurance value chain – marked by their excessive dependence on human effort – obsolete.

Flexible coverage options, micro insurance and peer-to-peer insurance will become viable options in the long run.

Reinsurers will provide risk capital directly to digital brands, and regulatory frameworks will accommodate shorter value chains.

Lifestyle apps will re-imagine the insurer-insured relationships. Application Programming Interfaces (APIs) will enable the creation of insights-driven offerings as they integrate data from multiple sources.

Deeper understanding of customer behaviors will lead to more accurate risk assessments, personalized premiums and value on a sustainable basis for better customer experience and brand loyalty, plus reduced false claims.

Premiums will become highly personalized, enabled by new sources of tech-enabled data such as Internet of Things, mobile-enabled InsurTech apps and wearables. With the connected devices market poised to grow strongly in the next five years, Property and Casualty (P&C) insurers will be able to extract real-time and accurate data on the loss exposure of individual consumers. This will help them proactively respond with timely and highly personalized interventions.

A Europe-based insurance company’s partnership with Panasonic is a good example. Panasonic’s sensors provide mobile alerts to both the insurer and its customers for quick and informed mitigation of issues.

by Yana Keller