There’s no disputing that the insurance industry is one of the booming sectors of the global economy. You will be greeted with numerous insurance trends in 2021.
As the dawn of the new decade beckons, it’s becoming evident that the fortunes of the industry are about to be elevated to a higher pedestal.
Investors and stakeholders in the global insurance sector are already looking forward to the year 2021, which many have posited to be a defining year for the insurance sector.
What is it about insurance in the coming year? Is 2021 “the year of insurance.” Or, is it one of the market speculations that crash like a pack of cards in the end? There are more than meet the eye.
Read further to discover the positivity of the insurance industry in the year 2021 and the possible challenges that are on the way too.
1. Exponential Growth in Customer Needs
Insurance companies from different niches hinge on the needs of the clients or customers to make the most out of their ventures. In the last couple of decades, the needs of the customers have been on an exponential trend. Now, it’s evident that the coming year 2021 would bring more of such customer needs.
In the light of the fact that customers are the disruptive forces in the insurance industry and their demands determine the direction of the industry, there are many indications that they would continue to dominate the affairs of the sector.
Ideally, insurers would be exploring ways to expand their services in terms of immediately resolving the clients/customers’ complaints, building and enhancing the relationships with the customers, and offering pecks to keep them glued to their services.
Understanding and expanding customer expectations are one challenge facing the insurance industry that is likely to hold down the insurance industry in the coming year.
Therefore, it wouldn’t be out of place to posit that the year 2021 would be a year when many insurance companies would be embroiled in a battle of supremacy as they try to outshine the others to get and retain more clients.
2. Mergers and Acquisitions are Likely
Worthy of mention is that newer insurance companies are joining the industry with new ideas. For older insurers that can see beyond their noses, such startups could offer an excellent connection to meet their desired goals.
Hence, the likelihoods of Mergers and Acquisition (M&A) services are likely to be on the rise in the year 2021.
Also, older and even newer insurance companies may want to embark on strategic collaborations with other firms to advance their growth. The move is not unconnected to the rescinding impacts of organic growth and the latest approach of adopting equity partnerships and alliances to consolidate on the chess moves of other contenders in the insurance industry.
3. Humans Out of the Window; AI Comes into the Picture
Technology is the primary force that drives the success of any industry. It takes a sector of the economy that has futuristic tendencies to integrate the latest technologies into their operations.
On the one hand, Artificial Intelligence (A.I) is booming and has made many tremendous impacts on different sectors of the global economy. At the onset of the year 2021, A.I would be one of the many technological frameworks that would be integrated into the insurance industry. Already, the duo of Shift Technology and Carpe Data, which are some leading insurance firms have commenced further operations using A.I.
Although Artificial Intelligence (A.I) can work effectively on a standalone basis, some human inputs would still be needed at intervals to fine-tune the technology for better efficiency.
4. Blockchain Technology Beckons
Acclaimed in many quarters as the “most disruptive technologies of all times,” the Distributed Ledger Technology (DLT), aka blockchain, has grown over the past decade of its inception to become one of the networks used across many industries.
The Peer-to-Peer (P2P) system of communication, the speed/scalability, and the overall security are some of the features that hit on the pain points of many potential users – the insurance industry inclusive.
The application of blockchain technology into the insurance sector in the year 2021 would not only institute peer systems of communications between the insurers and the insured but would also trigger a significant reduction of costs.
Buoyed by the creation of a digital ledger, blockchain also ensures that the information/data shared are not only authentic but is also verifiable and fraud-protected. This will to a large extent help in curbing the impact insurance fraud.
Besides, the impacts of blockchain technology can be felt more in the underwriting department of the insurance sector. The department is responsible for confirming or authenticating claims. In light of the chances of losing some information in the process and the feasibility of human errors, it becomes essential that the application of blockchain technology is used to serve as a central repository of data.
Above all, the underlying smart contract technology incorporated into the blockchain network provides real-time confirmation of the users’ history, just as it underwrites and monitors every contract or workflow created on the blockchain network.
5. The Rise of Autonomous Vehicles
With the rise of Electric Vehicles (EVs) as promoted by notable brands like Tesla and Ford, a similar gesture is underway in the insurance industry with the rise of autonomous vehicles.
Autonomous vehicles, otherwise called “self-driving cars,” are designed to streamline the transportation sector by reducing the burden of driving on the part of the drivers. The automobile insurance niche is the sole beneficiary of autonomous vehicles, as the concept empowers insurers therein to have better insight into the cause of a car crash. So, if it were confirmed that the driver was not at fault, then the manufacturer would take the blame, and make the necessary remunerations.
The Insurance Industry World Trend in 2021
Despite the few hiccups that might be on the way, the insurance industry is set to start the year 2021 on the right footing and with excellent frameworks to make it work. So, you can be sure that the evolution of the insurance industry via the applications of the trends, as mentioned above, would correlate with the dawn of a new decade.