The UK insurance market is overcrowded and competitive. These themes are expected to continue over the next ten years, mostly thanks to ongoing technological advances.
Driverless and connected cars
Driverless cars and lorries will soon be permitted on Britain’s roads. Indeed, Chancellor Philip Hammond has confirmed he would like to see driverless cars on the roads by 2021. When it comes to insurance for driverless cars, the industry is committed to supporting this.
Following improvements to car technology, this could be used to adjust insurance premiums. For example, a driver taking a more ‘dangerous’ route to work could see a real-time rise in their premium.
Improved risk profiles
In the car insurance market, Floow is working with worldwide insurance companies to decrease insurance premiums considerably. New tools will be used to create individual risk profiles for drivers, varying their insurance premiums in real-time. They could even inform and educate motorists on the minor changes they should consider making to their driving style. That would help reduce insurance costs and improve road safety.
Many people are choosing to use fitness tracker devices. Data collected from these devices could be shared with insurers, to help gain a better knowledge of their clients. A fitness tracker could help to work out a personal risk profile that is based on the client’s activities. For example, taking part in ‘dangerous’ activities such as rock climbing or snowboarding could see life assurance premiums rising. In contrast, joining in with wellbeing activities like yoga and Pilates could lead to lower premiums.
More and more people are equipping their homes with smart safety features. That includes everything from smoke and carbon monoxide detectors to security cameras and smart doorbells. Having these features installed could see insurers reducing premiums to reflect higher levels of safety and security.
Artificial intelligence will allow underwriters to predict losses, manage risks and provide more effective advice. An increasing amount of data is being gathered by the government, businesses, households and individuals. According to Deloitte, 2.5m terabytes of data is created every day. But the collection of data is of little use unless the information garnered can be used meaningfully. In the insurance sector, AI is likely to feature heavily in back-office processes. It could also be used to walk customers through a simple claims process. But ABI director, Huw Evans, has pointed out that people usually contact their insurance company following some kind of trauma. This means there is still a very real need for high-quality, empathetic human interaction within the industry.
Other technological advances
3D printed buildings are set to become more commonplace. Insurers will need to consider how such developments will affect risk assessments.
Brokers will also need to consider the increased popularity of drones, autonomous farming equipment and surgical robots. All of these are set to become commercially viable over the next ten years. For example, the increased presence of robots in day-to-day life will affect risk levels. They could also alter customer expectations and create opportunities for new products and services.
The needs and expectations of insurance customers have increased rapidly over the past decade. In a flooded market, customers are overwhelmed by choice. That means insurers can no longer rely on customer loyalty when it comes to renewal time. To tackle this issue, many insurers have started to offer a selection of add-on products to complement their insurance offering. For example, many insurers offer Home Emergency Cover or Legal Protection when selling home insurance or car insurance products.