Future Trends And Market Changes In Life Insurance

   A life insurance can be simply described as a contract between an insurance policy holder and an insurer where the latter promises to pay a beneficial sum of money to the former after their death. It is a main form of financial support to a family after the death of their breadwinner.

This is the reason why people are applying for life insurance schemes in increasing numbers at present. The future trends in the sector of life insurance seems promising. In this article, we are going to discuss about the future trends as well as the market changes in life insurance sector. Let us begin the discussion.

Future trends in life insurance

Some of the promising future trends in life insurance are as follows:

Flexible terms and digital avenues

Millennials and gen z will find it difficult to buy long-term contracts so insurers should start offering short tenure insurance policies. This will make it flexible and easy for everyone to understand everything and make wise decisions in an appropriate manner.

Both millennials and gen z people should have alternatives which can be modified in such a manner so that they are suitable for various life changes, such as marriage or buying a new home. Some of these modifications can be increasing or decreasing the insurance amount or turning the shorter tenure insurance policies into longer ones.

Digital technologies for underwriting

Future trends about life insurance are showing the importance of digital technologies for underwriting. During the recent period, insurers are required to adopt digital technologies for improving the process of underwriting and also for simplifying the process for digital population.

One of the recent examples is the use of health apps and wearables for simplifying the entire process.

Predictive analysis can be introduced for understanding and determining the potential risks as well as premiums. This will enable insurers to use technology for improving underwriting business models. This is going to provide a more continuous and effective experience to the people of younger generation.

Ecosystem partnerships

Another future trend in life insurance is ecosystem partnerships. Insurers are trying to develop ecosystem partnerships with non-traditional insurance market participants with the goal of creating and distributing new products and services, reaching new markets and improving communication with their policy holders.

Use of AI and automation

It can be anticipated from the latest trends that Robotic Process Automation or RPA will become very much important in the insurance sector, along with Artificial Intelligence or AI. This will be further boosted by new data channels, better methods of data processing and advancements in AI algorithms.

Many insurance companies are applying AI and behavioral economics as their core elements. AI will help the companies to get rid of brokers and paperwork, whereas behavioral economics will help in reducing fraud, thus helping in to save time, effort and money.

Some companies are also thinking about introducing AI-infused model for underwriting in order to identify the potential risks in an accurate manner. This will enable the company to achieve higher profits. 

Bots are going to become mainstream in both front and back-office in future. This will be done in order to automate policy servicing and claims management for providing faster and more personalized customer service.

Many companies are slowly introducing AI bots and automated insurance agents for interacting with their customers. This ensures that the work will be done at a faster rate in an accurate manner.

Automation and AI will have a significant impact on the business outcomes in customer experience, operational efficiencies, cost optimization, market competitiveness as well as new business models. It will enhance the quality of all these tasks and features.

Combining group and individual coverage

Some concepts are emerging at present which are removing the differences between individual and group insurance cover. This will enable the customers to enjoy both the coverages.

This combination is forming at a time of changing workforce and increase in freelance workers. The group and individual insurance are combining two different ways:

An example of strategic archetype 1 can be a group-focused startup which offers employee benefits and rewards for improving the physical and mental well-being of employees.

A proprietary gamified interface with a unique digital currency provides the employees with various health services, such as employee assistant programs, virtual access to doctors and mental health support.

This platform also offers the unique opportunity of increasing traditional group benefits and add more products which have been selected individually. This helps in opening a new channel for making incremental insurance sales.

An example of strategic archetype 2 can be a digital insurance broker and a roboadviser which provides income continuation to independent contractors as well as freelancers during various situations like illness, sick leave, disability and even death.

Different types of individuals or freelancers gather in this platform and recreates the employee benefits which those freelancers would have enjoyed if they were employed in a more traditional workplace. 

Blockchain will become mainstream

Different types of insurance functions process considerable volumes of customer data in real time so they require an easy and secure way of transferring data across various organizations and their stakeholders. One option for them is blockchain technology.

Blockchain technology will provide safe data management across various interfaces and stakeholders without losing integrity. This technology helps in doing various tasks at reduced operational costs, such as identity management, underwriting, claims processing and fraud management.

Additional benefits of blockchain technology are Decentralized Autonomous Organizations (DAOs) and smart contracts. Many insurance companies have already begun an initiative for exploring the applications of blockchain in insurance.

Life insurance is the main support of families during uncertain times. It will secure financial stability to the family if something happens to the sole breadwinner of the family. Since life is unpredictable, everyone should have a life insurance policy.