Property & Casualty Insurance Trends

Redefining insurance

The Property & Casualty insurance industry is constantly evolving, with new trends and developments emerging every year. As ambitious as it sounds, P&C must be reinvented now to be competitive in the upcoming years. Let’s have a look at some of the most influencing trends.

Consumer evolution

Today’s consumers are highly connected, impatient, and well-versed in technology. They expect a high level of convenience in their digital interactions, which also applies to insurance.

Look at the generation split that covers most of the population.

Gen X and Millennials (Gen Y) were the main insurance customers for the last decade, but from now Gen Z comes into play. Five years ago Gen Z was perceived as children born in the era of digitalisation, but very soon they will start forming a major customer base. And their expectations are different from what the insurance industry was used to. Let’s look at some of them.

• Gen Z is highly cost-conscious, often comparing prices and searching for discounts and reviews before making a purchase. However, they don’t spend too much time on that. They also prefer a more personalised approach, where they can pick and choose specific coverage options rather than paying for an all-in-one package.
• Gen Z’s cost-consciousness is balanced by their willingness to share personal information in exchange for discounts and customised policies. This is different from older generations who may be more hesitant to provide personal data online.
• They are specifically interested in usage-based pricing, with many of them willing to pay for insurance based on their driving behaviour and distance travelled.
• The younger generation is leading the way in utilising connected home devices such as thermostats, smoke detectors, and security systems. This leads to an increase in demand for IoT-based insurance that includes value-added services to minimize risk.
• They are also known to be less loyal to brands and are more likely to switch insurers if they find a better deal.
• Lastly, the upcoming generation is expecting companies to take a stand on social and political issues, which is a considered criterion when choosing a service provider.

There’s no better time for insurers to become more digital and flexible.

Embedded Insurance

Embedded insurance integrates protection directly into a product or service being sold. That means the insurance product is not sold to the customer ad hoc but is instead provided as a native feature. With it, insurance is no longer sold, because it is bought as a part of something else.

For example, a company that sells smart home devices might include a warranty or accidental damage coverage as part of the purchase price, rather than requiring customers to purchase a separate insurance policy. This can make it more convenient for customers to obtain coverage, and can also help companies differentiate their products from competitors.

Embedded insurance can also be more cost-effective as it can be bundled with the cost of the product or service, rather than being sold separately. This can make insurance more affordable for customers, especially for low-value products and services.

It is estimated that for P&C, embedded insurance could account for over $700 billion in premiums by 2030, or 25% of the total market worldwide.

Telematics

You have probably heard of telematics in the context of vehicles. It allows the transfer of diagnostic data directly from a car to a central server, which can be accessed by the vehicle’s owner or the manufacturer. It’s a way for cars to communicate with computers and share information about their location, speed, and other important details.

Telematics becomes more and more attractive for insurance companies as it is like having a little “spy” in your car that tells an insurance company about policyholders’ driving habits.

Here’s how it works: you would have a small device installed in your car, which would gather data about your driving, such as your speed, braking, and mileage. This data would then be sent to the insurance company, which would use it to create a personalised insurance policy for you.

For example, if you’re a safe driver who doesn’t drive too much, you might be able to get a lower insurance premium. On the other hand, if you’re a risky driver who drives a lot, your premium might be higher. This is because your insurance company will take into account how much risk you pose to them when setting your premium.

Telematics in insurance is a win-win situation for both the customer and the insurance company. The customer can save money if they drive safely and the insurance company can also get a better understanding of the risk they’re insuring so they can offer a fair premium.

However, telematics is not only about cars. This technology can also connect to in-home cameras to perform inventories of household items, which simplifies loss remediation by speeding up claims filing. Domestic energy consumption data can also be made available to set optimised building coverage.

Data-Driven Personalisation

When buying insurance online, customers leave lots of personal data. Why not use it to create tailored and relevant experiences for customers? Questionnaires and online forms enable insurers to gather information about their customer’s specific needs and preferences.

For example, when purchasing car insurance online, the customer would be asked a series of questions about their driving habits, such as how often they drive, the type of car they drive, and their daily commute. This information would then be used to create a personalised insurance policy that is tailored to the customer’s specific needs.

Additionally, the online platform can be integrated with third-party data providers to enrich the data collected from the customer, such as credit score, address, and other demographic information. This can help to create even more accurate and personalised policies. For example, if the customer lives in an area with a high crime rate, the system can automatically recommend coverage for theft and vandalism.

Thus, data-driven personalisation can increase customer satisfaction resulting in higher sales rates.

Building a Partnership Ecosystem

Ecosystem refers to the network of partnerships and collaborations between P&C insurers, technology providers, insurtech companies, distributors, and other industry stakeholders. Building a network of partnerships is crucial to access data and insights that can be used to create more personalised and relevant products and services.

According to Deloitte’s research, large insurers will be able to realise a significant competitive advantage by cultivating integrated partnership ecosystems. It enables them to deliver value-added tools and services to consumers through frequent customer interactions.

For example, helping policyholders with a purchase or maintenance is not only beneficial for them but also a cost-effective method for insurers to acquire and retain customers, as opposed to traditional integration strategies such as vertical or horizontal integration.

To better understand, let’s take a glance at the partnership ecosystem of Deloitte’s P&C insurance. The number of partnerships is quite impressive. There are 21 unique partners playing their roles at each step of the insurance pipeline. They all help Deloitte create innovative insurance services that better meet customers’ needs and improve overall industry performance.

Conclusion

The P&C insurance industry is facing a period of change and evolution, driven by the emergence of new consumer segments and the development of new technologies. The insurance industry should focus on providing more personalised, cost-effective and convenient options to customers. These strategies will help the P&C insurance industry stay competitive in the years to come.