How the pandemic boosted innovation within the insurance industry
Published on 6 de April de 2021
Innovation inside the insurance sector

A new era

During the past years, the insurance sector was already experiencing a timid evolution towards more digitalized process. However, the current situation and the pandemic are boosting a faster change. Also, it is important to take into consideration that clients are not looking for the same products anymore. Their lifestyle changed, and so do their needs. 

One clear example is the massive cancelation of travel and event insurance products due to the restrictions, whilst the purchase of health care insurances increased because of the thread of getting infected by COVID-19. Moreover, processes also changed. More and more purchases are being done online, as well as customer support processes are digitalized in order to avoid contact because of the pandemic.  

The ecosystem is in constant development

On the other side of the coin is the loss of insurance companies. According to UNESPA (Spanish Insurance Corporates’ Association), the income coming from premiums during the third trimester of the year 2020 decreased a 10.82% compared to the previous year. Even if the figures are remarkable, still, the sector keeps a high level of solvency. The cause of this decrease are all the preventive measures and derived crisis from the global pandemic.  

Good news is that recently, more and more insurance companies are up to collaborate with Insurtech companies. Specifically, according to the World InsurTech Report 2020 by Capgemini, 67% of these companies are up to sign up agreements with Insurtech companies for the automatization of their processes and develop towards a more digitalized company.  

Unfortunately, more and more, we are using the word “cyber-attack” in our daily conversations due to the recent cases against for example ACER. And so do insurance companies. Cyber insurance became a critical tool for preventing massive cyber-attacks, and even if during the past there were a lot of competitors inside this industry. Now, companies are looking for very precise products designed considering their needs thanks to technology.  

Insurance companies are now requiring a faster digitalization in order to stop losing clients and make their investments more profitable.

Personalized products

Apart from the reasons mentioned above, also it is important to consider that next generations have a completely different lifestyle in which they are used to immediacy and personalization. For example, millennials do not own cars, flat, or houses anymore. Their trend is to rent all these means. That is why products should be adapted to the new necessities of the market, for example, by creating short-team insurance, temporary products, or international products for digital nomads.  

On the other hand, SMEs are starting their after-lockdown recovery. For many of them, the crisis is having an impact on their businesses. This is the reason why insurance companies need to get adapted to this new scenario and give SMEs what they need at this moment. What is more, the actual trend shows that SMEs are coming “back to basics”. They are just looking for fundamental basics (coverage, service, and value), at the same time they are becoming more price sensitive.  

Nevertheless, thanks to AI, Machine Learning and IoT among others, all the adaptation process will be much easier. Considering that before the pandemic 67% of the companies interviewed by GlobalData in their Trimestral Survey of Technological trends used these technologies before, impactful changes are coming very soon, and we the Wenalyze team are going to be part of this change.