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By Vermel Thomas

Traditional insurance must change to keep up with innovations

What does digital insurance look like?

The U.S. is entering an unknown territory regarding digital insurance regulations. The unknown factors are shaped by the new White House Administration and foreign regulatory changes. These unknown parameters also affect how the U.S. conducts business (i.e., the United Kingdom withdrawing from the European Union).

Hopefully negative interest rates are not the result of these global changes. Challenging digital regulatory conditions during the years ahead will affect insurers. Insurance companies must accelerate their attitude during the whole digital process.

Smart homes, self-driving cars and Uber insurance

For example, the housing industry is now called the “smart” home industry. The rapid increase of smart homes will cause changes in the design and demand of insurance policies. Terms will range from medium terms to long terms, and premiums and insurable claims must be revamped.

Also, the innovations in the auto industry are causing a challenge for insurers. The move toward autonomous vehicles and ride sharing companies is threatening to negatively affect millions of insurable risks. The only entities that will benefit from these changes are commercial auto insurers and product liability carriers. 1

Digitally based insurance companies

The insurance industry has been slow to adjust to these widespread changes, which has left many economic entities confused about their coverage. This allows digital newcomers to take the place of traditional insurance companies.

In other words, with the increased costs of insurance, consumers are beginning to demand changes or at least alternatives to traditional insurance processes. The newcomers in the insurance industry will begin to fill this gap and find ways to fulfill innovative insurance products that are driven by technology.

How the insurance industry can evolve

There are a few key areas that the insurance industry must embrace as they seek to create more automated processes. They must:

  • Improve customer service
  • Stay a step ahead of emerging competitors
  • Increase client engagement other than just claims and renewals
  • Develop new coverage products to meet new innovations
  • Develop better cyber risk management to keep ahead of growing threats and to comply with changing regulations
  • Explore M&A (merger & acquisition) opportunities to create scale, utilize excess capital, and add capabilities.

Regulators and millennials effect insurance changes

In addition to forecasting these changes to keep insurance businesses competitive, there is a demanding regulatory environment that continues to grow among the insurance sector. It does not appear that the industry will be monitored between just state and federal entities.

Due to the new technology era, traditional regulations will be governed by a hybrid of governmental entities, consisting of U.S., state and federal standard government procedures for insurance businesses.

The millennial generation is driven by the do-it-yourself approach, including working with insurance companies. As such, mobile technology continues to grow in regard to personal finance and insurance.

This generation expects that mobile insurance technology should quickly offer the ability to find insurance agents on demand, provide quotes, and report claims.

The insurance industry will continue to be shaped by the innovative technology era which will also increase its transparency and efficiency via algorithms and up-to-the-minute data.

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