Insurance Industry: Current Trends
Technology-enabled data collection, AI bots and omnichannel sales are three current trends in both the home and auto insurance industries in the US.
Technology-Enabled Data Collection
- The use of technology-enabled data collection to inform policy premiums was identified as a key trend in both the US home and auto insurance industries based on the fact that a preponderance of industry experts (e.g., PolicyAdvice, PricewaterhouseCoopers, Automobile Experts HQ, The Zebra, CUInsight, WNS) are currently highlighting this trend as one that will "shape" home and auto insurance in 2020.
- Specifically, American insurers in both the home and auto markets are increasingly harnessing the power of data collection tools and associated personal information to tailor, validate and/or further stratify policy prices.
- In the US auto insurance industry, insurance companies are attaching sensors to cars as well as using mobile telematics to better assess consumer mileage and driving behavior.
- Similarly, Peer Insight and CUInsight report that US home insurers are leveraging wearables, smartphones, smart meters and drone data to capture more accurate information about property insurance risks and claims.
- Not only does the use of such individualized information benefit insurers by enabling them to more precisely model insurance risks and extend coverage to untapped markets, but the trend also appears to be driven by consumer demand for lower premiums.
- For example, PWC found that 69% of consumers would be willing to have a sensor attached to their car to lower auto insurance premiums.
- In parallel, a study by V12 found that 88% of consumers are demanding more personalized insurance products, including individualized pricing recommendations.
- Meanwhile, one example of technology-enabled data collection in the property and casualty insurance market is Utah-based startup Geomni, which uses drones to quickly and accurately collect property claims data for insurers.
- Additionally, Root Insurance offers an app that tracks drivers and can save them as much as 50% on average for car insurance rates.
- The use of AI-enabled bots was selected as another significant trend in the US home and auto insurance industries based on the extensive discussion of this trend by experts including PolicyAdvice, Duck Creek Technologies and WNS.
- Specifically, both auto and home insurance companies in the US are beginning to deploy virtual, AI-enabled bots to interact with customers online.
- For example, GEICO's Katie chatbot is recognized as a "great example" of AI-enabled chatbots, while Lemonade's claim bot Jim can assess and pay property claims in three seconds.
- Moreover, Duck Creek Technologies forecasts that 95% of customer interactions in the property and casualty insurance industry will be "powered by chatbots" by 2025.
- Additionally, auto insurance companies are beginning to deploy AI bots in the form of drones, which are used to automate vehicle inspection.
- Notably, Erie Insurance and Allstate are two leaders in the use of such AI technology to enhance the vehicle inspection processes.
- Overall, this trend is being driven by a number of factors, including the ability of AI to improve the customer experience, optimize costs and improve insurers' market competitiveness.
- Lastly, the transition to an omnichannel sales and communications approach was chosen as a current trend for both home and auto insurers in the US based on expert opinion (e.g., PolicyAdvice, CUInsight) as well as the widespread demonstration of this trend by home and auto insurance providers (e.g., Allstate, Progressive, Country Financial, Nationwide, Farmer's Insurance).
- Notably, Allstate, Progressive, Country Financial, Nationwide, Farmer's Insurance are among the myriad of home and auto insurers that are currently highlighted for their execution of effective customer outreach efforts through less traditional online channels such as social media.
- Specifically, insurers for these markets are increasingly enhancing their use of traditional direct-to-consumer marketing channels by adding online direct-to-consumer communications and sales vehicles.
- According to PolicyAdvice, the use of multiple distribution channels is becoming "more important" for auto and home insurance companies because it increases their access to new and existing customers.
- As such, this trend is being driven by the fact that it expands the market reach of key auto and home insurance industry players, while also "eliminating the hassle" many customers experience when obtaining such insurance.
- However, CUInsight notes that while 74% of insurance shoppers research online before they make a purchase, only 25% actually bought a home or auto insurance plan through online channels as of 2018.