As of now, there are over 5,000 insurers in the U.S., and these numbers keep growing with pay-per-mile companies popping up every day. While the huge companies, with their many tentacles (agents), are still at the top of their game, the insurance landscape is shifting and changing quickly. There are new insurance trends already shaking up traditional insurers and agents. Plus, there is a frightening buzz about the future of car insurance and a new pack of insurance leaders too. See below for some emerging trends that may affect you soon.
Are Bundles Unraveling?
Because there are so many options out there, and because millennials like to do their research, bundling is losing steam. It used to be easier to get a client to bundle everything (auto insurance, homeowners or renters insurance and a small-business insurance). For convenience and for a generous discount, a client handed over the keys to all their risk. Now, with online payments and even online binding, the convenience of bundling is becoming less important. Unless insurers begin offering much more substantial discounts, it’ll be hard to maintain those multi-policy client relationships. There’s got to be something in it for clients not to jump ship to, say, the company whose philanthropic achievements strike a chord. And believe it or not, Millennial shoppers are making decisions based on these kinds of factors.
InsurTech is just a term that applies to any way that technology has disrupted the insurance industry, by using apps and other technology-based tools. Carriers and agencies simply rely on insurtech companies now for at least a sizeable portion of their insurance leads. It just takes too much time and money to generate insurance leads on their own. Companies like SmartFinancial are changing the way agents find consumers. They are also changing the way consumers shop for insurance. If you’re an agent and you’re still trying to get insurance leads organically, your overall ROI will improve if you employ one of these companies to feed you leads. The InsurTech segment of the insurance industry is only expected to grow--and massively. You’ll do yourself a favor by adapting to this new player in the insurance game.
It’s not so much that you need to sell different products, but you need to frame them differently. For instance, knowing that the growing demographic of insurance buyers is more educated and more likely to buy from a philanthropic company, hit those high notes instead of giving the old-school pitches about saving. One company that does this well is Lemonade, which boasts its flat-fee approach, giving back any additional profits to worthy causes. If you’re an independent agent having a hard time connecting with Millennials, maybe you need to start selling for other carriers.
Pretty much anyone with communications and data collection capabilities is forecasted to jump into the insurance game. Some familiar giants with lots of data on their users include Google, Facebook, Amazon and Overstock. In the days before Costco successfully launched its own brand of insurance, you’d have closed this article down after reading that Facebook was going to insure you in case you wrecked your car, but when you sit with the fact that the easiest way for an insurance company to survive in this day and age is to be technologically savvy, you’ll see that Zuckerberg and friends are most certainly qualified to insure your home and car. Let’s just hope they have cyber insurance in case of another huge data breach!
Before you start saying that cyber crime is hyped up as a legitimate risk, let’s put some hard numbers down: In 2016, there were around 1,093 data breaches recorded in the U.S and 1,579 were reported in 2017. Not only should cyber insurance be a core element of any commercial insurance package you’re selling, this is going to become a staple for companies in the following sectors: retail sales, restaurants, salons and spas, marketing companies, contractors, real estate professionals, consultants, insurance companies and agencies and finance firms. This pretty much includes any business responsible for sensitive third-party data. Remember that in the event of a cyber attack, all of your clients’ clients are at risk -- and your client may be the fall guy without the right protection. Time to revisit your book of business insurance clients?
They all say that blockchain is going to revolutionize insurance as we know it. But what is blockchain anyway? Blockchain is a real-time public ledger of peer-to-peer transactions made in bitcoin or another cryptocurrency. Blockchains can quickly set up what’s called “smart contracts” which are automated. Blockchain can truly improve the customer experience of buying insurance and, to the benefit of the insurer, it can detect fraud more easily and will be able to price products and automate claims processing more efficiently. Has it taken over yet? Not yet, but it’s sure to change everything as we know it.
These vehicles are going to change the car insurance game dramatically and insurers have been dreading how it may affect them for years. The truth is that not only will insuring cars become more complicated but the sensors on semi-autonomous cars are turning out to be sensitive portals through which hackers can gain control of vehicles and steal them easily. Now if these aren’t nightmarish risks to any self-respecting insurance professional, we don’t know what is. Cars with automated features and crash avoidance technology may shift the blame from the driver to the manufacturer, which would render traditional lines of auto insurance completely obsolete. As of now, the future is unclear. We keep hearing that these cars will reduce accidents and fatalities but we don’t have any numbers to work with yet. Still, we all watch wide-eyed to see what kinds of new liability laws are erected in the future. We’ll be sure to check back with you with all the interesting details as they trickle in!