New lifestyle-transforming technologies. Fundamental demographic shifts. Advances as well as threats in health and medicine. A business environment in flux. It’s no surprise that these risk-driving macro trends are spurring unprecedented challenges and opportunities for the insurance industry.
The upcoming World Insurance Report (WIR) 2019 explores this evolving risk landscape from the perspectives of both policyholders and insurers and finds that traditional risk management approaches, products, and coverage may no longer suffice.
Emerging risks are creating coverage gaps in insurance for both individual and business customers. Fewer than 15% of individuals and 25% of businesses surveyed for the World Insurance Report (WIR) 2019 feel comprehensively covered for any of the emerging risks identified in the report, though most of them reported medium-to-high exposure to these risks. For example, today’s customers recognize cyber risks as being one of their top concerns, with 83% of individuals and 87% of businesses feeling exposed to this risk. However, only 3% and 18% respectively agree that their current policies comprehensively cover cyber risks.
While this glaring coverage gap calls for insurers to reassess and redesign their offerings to address evolving and new risks, the report found that insurers’ product pipelines are yet to catch up with current realities.
The insurance industry is facing critical decisions about which capabilities to develop and how to accurately assess these new and evolving risks. With technology expanding the scope of potential achievement, insurers can take a more comprehensive approach to risk management and tap into advanced technologies to build essential risk-assessment functions.
How can insurers effectively manage the evolving risk landscape?
Source: Capgemini Financial Services Analysis, 2019
As a first step, it is critical for insurance firms to continuously and comprehensively assess the entire risk universe to determine how evolving risks are impacting individual and business customers and also to predict what new threats may be on the horizon.
Simultaneously, insurers should keep real-time tabs on changing market dynamics in terms of evolving customer expectations and technological advancements. Knowledge is power and can help insurers explore innovative ways to address emerging risks while meeting customer expectations.
As they say, prevention is better than cure, and the same applies to insurance. With insights from market scanning and powered by connected devices and advanced analytics, insurers can work to proactively control and prevent risks in customers’ lives wherever possible – as this can have a deep impact on the insurer’s payer performance.
For example, to address rising healthcare costs, health insurers are launching prevention programs for chronic conditions such as diabetes through innovative mobile apps and wearables. When customers prevent or delay the onset of such diseases, insurers reduce claims costs.
When new risks emerge, little historical data may be available. Thus, insurers should enhance their risk quantification capabilities with the help of new data sources. Data from social media, third-party databases, and connected devices can provide real-time risk insights while technologies such as artificial intelligence (AI) and machine learning can enable more accurate risk prediction models.
Together, these capabilities can help to accelerate enhanced product and experience design for the new era of risk. Within this new, highly dynamic environment, it will be critical for insurers to reassess and redesign offerings to meet emerging risks profitably and sustainably while meeting policyholder demand for comprehensive coverage.
Technology can enable insurers to effectively control emerging risks by taking a more proactive role in customers’ risk management to broaden value propositions and boost long-term profitability.
Are today’s insurers ready to adopt new risk management capabilities and tools?
Through extensive interviews, the WIR 2019 offers details about where insurers are on their risk management journeys and uncovers which critical new capabilities are being embraced or put on the back burner.
Find out more in the World Insurance Report 2019 by pre-registering here for a copy of the report, available on or after Tuesday, May 14.