New products guided by the shifting demographics and demand for personalized offerings are predicted consumer-facing trends in the insurance industry in Europe. Insurance for the sharing economy and more insurtechs partnerships trends are expected in the European insurance industry generally. A detailed coverage of the trends is presented below.
Predicted Consumer-Facing Trends in the Insurance Industry
1. New Products Guided by the Shifting Demographics
- The shrinking and aging population is Europe will pose challenges to insurers in Europe. Moreover, the rising demand for health care and mass retirements will continually exert real pressure on the available social resources.
- Similarly, the high unemployment rates prevalent among the younger generation will also have a negative impact on the social resources. With governments in the Europe withdrawing from giving pension, the trust in government among the citizens will dwindle.
- Thus, insurers will have an opportunity to provide new products that will provide security to consumer and fill the gap left by the changing dynamics.
- Millennials will also greatly influence how insurance companies operate. Considering that the generation has different characteristics compared to the previous generations, their relationship with insurers will have a differing trajectory and timing.
- For instance, millennials and other young generations are delaying buying homes and remarrying. They also exhibit different spending habits and are tech-savvy.
- As a result, insurance companies will need to leverage technology to come up with new products tailored to match the lifestyle of the millennials.
- The driver behind the trend is the changing demographics in Europe. According to the European Commission, Europe is undergoing profound societal and demographic changes that are affecting many areas of life.
- According to Maxime Rieman, an expert in insurance and other financial products, insurance companies should adjust their approach and products to address the unique needs of the millennials and other younger generations.
- He asserts that companies should come up with new products and marketing tactics targeting the rapidly growing millennial population.
2. Demand for Personalized Offerings
- The rising customer expectations will force insurers in Europe to focus more on personalized offerings in order to meet them. Insurance companies will adopt digital technologies to enhance their ability to offer tailored, flexible, and more personalized products in a pain-free and seamless experience for customers.
- Personalization, in this case, goes beyond knowing a client’s name. It extends to comprehending their needs, listening to their perspectives, and creating products and experiences that match their expectations.
- Today, the value proposition for most insurance products in Europe is narrow and too general. Conversely, most consumers are seeking for a more personalized and holistic approach guided by their individual needs. Thus, insurers will embrace digital tools to help them master the ability to provide intuitive, streamlined, and personalized experiences.
- For instance, some insurance companies in Europe have already developed an algorithm that personalizes add-on policies in real-time.
- A key driver of this trend is the need for simplicity and accessibility common in other industries. Customers are demanding a personalized service designed to match specific circumstances and their individual wishes.
- According to Monika Schulze, an insurance expert who is also the Global Head of Marketing in Zurich Insurance, insurance customers want information that is relevant and designed beyond the normal communications. Thus, insurance companies must change their traditional stance to make their relations with customer more personal and ongoing.
Predicted Trends for the Insurance Industry Generally
1. Insurance for the Sharing Economy
- The sharing economy has experienced a rapid growth as web and mobile app technology has facilitated easy and cheap momentary use of assets by strangers. Companies such as Airbnb and Uber are examples of sharing economies.
- The sheer characteristic of the sharing economy makes the line between commercial and personal use of assets feint. Traditionally, insurers have been accustomed to offering either of the two categories.
- Looking into the future, insurance companies will have to develop new and more products that will have a distinctive line defining who bears the liability for incidences when the asset use is quite fluid.
- More insurance companies will be keen to partner with sharing economy platforms to provide solutions for specific platforms. Some insurance companies have already started leveraging the trend. For instance, Airbnb has partnered with Lloyd’s of London to offer Host Protection Insurance program.
- A key driver of the trend is the growing popularity and proliferation of the sharing economy. In Europe the sharing economy is expected to experience a rapid growth. Thus, insurance companies must position themselves to address the needs of the emerging market.
- According to Ian Campos, in insurance industry expert, insurance firms have an immense scope to improve their revenue by coming up with products that address the needs of a sharing economy. He observes that the firms should develop products targeting the various verticals such as home and office sharing, ride-sharing, and on-demand workforce.
2. More InsurTechs Partnership
- Insurance companies in Europe will increasingly work with insurtechs to solve technological challenges and explore new opportunities. As a result, more partnerships and acquisitions of startups are expected.
- According to the 2019 Insurtech Outlook report, startups play a key role in coming up with solutions to meet the insurance industry needs.
- The partnerships will also focus on increasing revenue, cutting costs, and improving customer experience. With insurance companies facing immense pressure to enhance efficiencies and satisfy the needs of the digital customers, partnerships with insurtechs and fintechs will give them more opportunities.
- Forging working relationships with the startups will help insurance companies access new technologies, experiment with creative business models, and drive innovation.
- A key driver of the trend in Europe is the high interest rates and stiff regulations that are forcing insurers to look for profit and growth opportunities elsewhere. The changing customer expectations and technological advancement are also spurring this trend.
- According to Tom Super, the vice president, Insurance Intelligence for J.D Power, partnerships with insurtechs could be the most cost-effective and least risky option for insurance companies seeking to enhance their insurtech capacity. He observes that partnerships are less risky compared to building in-house or acquiring insurtechs.