It is a fact of life that insurance is an essential component to protect one’s self. Every business needs insurance and every individual needs cover should the worst happen. But the insurance industry is rapidly changing alongside the world. We are living longer, technology is advancing and we are becoming more globalised. As a result, this provides risks and opportunities for the insurance industry. But what are the key components to consider with the future of insurance?
The Growth of Technology
The expanding reach of technology means that insurers can assess the risk of an individual. While the insurance industry can now use various components to assess an individual’s propensity for risk, such as the black box installed in drivers’ vehicles, there are other components that can help an insurance company to assess an individual. The rise of predictive analytics in insurance, as well as telematics, means that technology is helping the insurance industry but it can also have a detrimental impact on its reputation especially when it comes to data leaks. It is a double-edged sword.
Societal Changes
The ageing population is the area where the insurance industry needs to adapt. It’s crucial for life and non-life insurance policies to meet the needs of a population that is outliving its life expectancy. This means that older customers shouldn’t be treated unfairly. However, when an individual is lumped into a category this can go against them or preclude them from certain coverage especially in relation to health. Longevity protection can help to meet the needs of a population growing older. But it’s also important for the insurance industry, in conjunction with the regulators and the government to ensure that these products are fit-for-purpose.
Environmental Changes
We are witnessing the effects of climate change every single day. The floodings all across the UK earlier this year have highlighted just how much the insurance industry needs to adapt. Geographic location is a key part of insurance risk. But so is the occupation of an individual as well as their health. Those that have poorer health could be more susceptible to problems in a heatwave, for example. In order to ensure the industry adapts, it is imperative that premiums ascent that represents a person’s risk without it being unaffordable.
The Political Climate
The EU referendum has thrown up a significant number of concerns for the insurance industry. Heading towards a no-deal Brexit can mean that premiums may potentially go up. With this, comes fewer paying customers. There are those who will have to decide between feeding a family or paying an insurance premium. And this is not a choice that will lean towards the latter.
In order for the insurance industry to thrive over the next decade or so, it will need to make considerable adaptations. The future insurance can appear bright but it can also appear pensive. Insurance, in all of its forms, should be affordable for customers but also it’s important for insurance providers to embrace change in an ever-evolving world.
