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#BizTrends2020: How technology is driving innovation in the insurance industry
Let’s take a look at how technology is shaping the emerging trends influencing the insurance industry, the impact of which we are already starting to see.
Predicting the future through genomics
At home and abroad, customers are much more informed than ever before about their potential health risks through digital tools like genomic DNA testing, which predicts disease risk.
On one hand this promises to positively impact the development of preventative measures. On the other, this is also likely to have a significant bearing on the insurance industry as customers may use that information to select against their provider, being privy to information which an insurer does not have when assessing that risk. This may influence the industry’s approach to underwriting, product design, pricing, policy wording and claims.
We are living longer
Technology not only supports preventative medicine but will increase the development of early treatment plans. This has a major impact on longevity. In their book, The 100 Year Life, Andrew Scott and Lynda Gratton write about how people born today will live to 104. And with continued medical advances, these figures will continue to grow.
These changing age and life expectancy patterns have seen a growing number of individuals re-evaluating the traditional approach to work and retirement, with many anticipating to work well past 65. Yet, despite this, much of the insurance industry’s thinking around retirement planning is still based on the assumption of working until 65 and dying at 90. The fact that many will probably retire at 75 instead of 65 has major implications, not only on retirement planning, but also on the choices customers need to make in preparation for that time, like protecting one’s income ahead of retirement. It’s vital the insurance industry adjusts to meet this trend, with product solutions that match the needs of an aging income earner.
The jobs of yesterday aren’t the jobs of today. And the careers of today won’t be the careers of tomorrow. Contrary to many people’s fears, technology and robotics are sure to see a change in the way we work, not necessarily in the quantity of jobs available. Advancing technology sees the creation of new occupations that didn’t exist a decade ago, such as professional drone operators. The future belongs to those who are willing to adapt.
According to a 2019 World Development Report¹, “Overall, technological change that replaces routine work is estimated to have created more than 23 million jobs across Europe from 1999 to 2016, or almost half of the total increase in employment over the same period.”
Technology has liberated many people by facilitating the creation of jobs through working online or joining the so-called gig economy, defined as “a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs².” This supports the coinciding changing mindset of a previous generation, who wanted job security and a guaranteed income, to a new generation entering the workforce with an overwhelming desire for flexibility and work-life balance, and customers are using technology to enable that lifestyle.
On home turf, the gig-economy is growing from strength to strength. Stats SA Employment Outlook reported that temporary employment rose from 2.6 million in 2017 to 3.9 million in 2018. As technology moulds the future employment landscape, life insurers need to evolve in parallel. It’s vital we explore alternative or improved ways to assess risk and ensure we are able to continue providing quality Income Protection to individuals leading these new occupations, regardless of whether they’re salaried, a freelancer, or even driving revenue from multiple income sources.
The impact on customer experience
Many life insurers view technology as a way to dis-intermediate but this often comes at the expense of product quality and customer service. Customers still largely prefer a one-on-one conversation rather than having to navigate the online space in isolation. In fact, a recent survey4 found that 68 percent of customers hadn’t yet used a chatbot, and 56 percent of those respondents cited the reason as a preference to rather communicate with real people.
Whilst technology supports speed and agility, it’s unlikely to replace the human component of advice any time soon. Insurers will more likely use these advances to enhance the advice process and customer experience through increased sophistication in E-Apps, underwriting processes and adviser sales tools.
It remains to be seen how these trends will continue to grow and advance the insurance industry. The future is in the hands of the players who can remain agile and adapt to the nature of the changes occurring in the industry, many of which are driven by technology. While it certainly is an exciting time, our purpose should remain consistent: connecting on a human level and drawing customers in by simplifying insurance, so that all income earners are able to protect their monthly income, no matter what they do for a living.
1World Development Report 2019: The Changing Nature of Work. Published: October 2018
3Freelancing in America Survey, released by the Freelancers Union and Upwork
4Voxpro Customer Experience Survey
FMI, a Division of Bidvest Life Limited, offers a suite of life insurance products to protect individuals against any of life’s risks. FMI specialises in monthly income benefits that protect people’s livelihoods when they’re unable to earn an income due to an illness, injury or death.
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|At FMI, we do life insurance differently. Choose to protect your Income First at every stage of your life, so you can continue to make an impact on those you love and the world around you.|
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