{"id":10529,"date":"2021-09-29T10:08:58","date_gmt":"2021-09-29T07:08:58","guid":{"rendered":"https:\/\/insly.com\/?p=10529"},"modified":"2022-01-21T16:31:36","modified_gmt":"2022-01-21T13:31:36","slug":"three-mega-trends-in-insurance","status":"publish","type":"post","link":"https:\/\/insly.com\/en\/blog\/three-mega-trends-in-insurance\/","title":{"rendered":"Three Mega Trends in Insurance"},"content":{"rendered":"
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Insurance. There is change in the air. We sense it in boardrooms, conferences and magazine articles. It\u00a0screams\u00a0from start-up decks. Big data,\u00a0AI,\u00a0blockchains. Usage-<\/span><\/b>\u00a0<\/span><\/b>based insurance.<\/span><\/b>\u00a0<\/span>\u00a0<\/span><\/p>\n

We believe all that is just the beginning. Insurance innovators are still operating\u00a0on\u00a0the fringes.\u00a0They are making insurance easier to buy online and on smart devices,<\/span><\/b>\u00a0<\/span><\/b>helping underwriters with data analytics.<\/span><\/b>\u00a0<\/span>\u00a0<\/span><\/p>\n

There is an even larger shift underway, one that will strike insurance at its core. It will\u00a0shock\u00a0insurance carriers\u00a0and\u00a0challenge how insurance is made, not how it\u2019s sold. Here are the three\u00a0mega\u00a0trends of the new chapter in the history of insurance.<\/span><\/b><\/p>\n

#1 Mega Trend in Insurance: Capacity Will Become a Commodity <\/span>\u00a0<\/span><\/h2>\n

Distribution and reinsurance are inching closer together, putting a squeeze on primary insurers from both sides. When we\u00a0remove\u00a0the veil of mysticism, insurers have only one job: matching risk with capital. And they\u2019ve managed to turn it into a costly, cumbersome affair.\u00a0<\/span>\u00a0<\/span><\/p>\n

There are competent, capable institutions next to insurers on both sides of the value chain.\u00a0Brokers\u00a0and MGAs on one side and reinsurers on the other. All major reinsurers have floated ideas around disintermediating insurance, with several having taken the first concrete steps.\u00a0<\/span>\u00a0<\/span><\/p>\n

We are confident\u00a0in this trend in insurance:\u00a0insurance capacity will become a\u00a0commodity;\u00a0it will be accessible for MGAs and\u00a0brokers the same way as\u00a0<\/span>Google Cloud<\/span><\/a>\u00a0or\u00a0<\/span>Amazon AWS<\/span><\/a>. MGAs capable of profitable underwriting will connect their IT systems to insurance carrier APIs for semi-autonomous insurance capacity, with reinsurers and capital providers tapping\u00a0into the carrier system from the other side.\u00a0<\/span>\u00a0<\/span><\/p>\n

Thus,\u00a0insurers will have to start reducing the heavy burden of cost they put on the value chain, or justify it with a next level of\u00a0added\u00a0value.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span> Book a demo<\/a><\/span><\/span><\/span><\/p>\n

#2 Mega Trend in Insurance: MGAs Getting Stronger <\/span>\u00a0<\/span><\/h2>\n

Insurance distributors have been more adept at turning\u00a0the\u00a0internet age technology into an advantage. They have been leading the shift to online sales every step of the way. Incorporating technology in business is\u00a0becoming\u00a0cheaper and simpler, granting an advantage to small and nimble firms.\u00a0<\/span>\u00a0<\/span><\/p>\n

We are\u00a0seeing\u00a0a clear trend in insurance as\u00a0more and more \u201ctechnology first\u201d MGAs\u00a0emerge. They are\u00a0using cutting-edge IT solutions not only in sales,\u00a0but also in underwriting and customer service\u00a0from\u00a0risk scoring\u00a0based on big data\u00a0to chatbots, and more.\u00a0<\/span>\u00a0<\/span><\/p>\n

Thanks to the ability to learn and adapt fast, small and agile MGAs have\u00a0beaten incumbent carriers\u00a0in\u00a0improving\u00a0product offerings and entering new markets.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

MGAs have turned into the hotbed of insurance innovation and business conquests, quite similarly to start-ups in the technology sector.\u00a0A new trend in insurance\u00a0is\u00a0MGA incubators and accelerators. With the money and\u00a0expertise\u00a0flowing in, MGAs are expanding from their original habitat of\u00a0the\u00a0UK and US to other markets\u00a0starting\u00a0with\u00a0Continental\u00a0Europe.\u00a0<\/span>\u00a0<\/span><\/p>\n

#3 Mega Trend in Insurance: Challenger Insurers <\/span>\u00a0<\/span><\/h2>\n

Rarely a week goes by\u00a0when\u00a0you don\u2019t read about insurance carriers investing gazillions in IT. It\u2019s\u00a0only natural to assume that the industry has become much, much more efficient. Wrong. The\u00a0expense ratios are stagnant or even increasing.\u00a0<\/span>\u00a0<\/span><\/p>\n

Translating existing processes to IT in a piecemeal way while dragging along an ever-larger<\/span>\u00a0pile of legacy systems has effectively moved the costs and inefficiencies from one budget row to another.\u00a0<\/span>\u00a0<\/span><\/p>\n

Size has become a serious disadvantage in technology adoption. You don\u2019t need billions for successful\u00a0implementation of\u00a0big data, AI,\u00a0or blockchains. It\u2019s about nimbleness. Technology has brought about\u00a0a totally new trend in insurance:\u00a0the era of the quick eating the slow, not the big eating the small.\u00a0<\/span>\u00a0<\/span><\/p>\n

Tech start-ups have already challenged traditional banks.\u00a0Now, it\u2019s\u00a0the\u00a0turn of\u00a0insurers. We will see an entire wave of\u00a0challenger insurers\u00a0setting a new benchmark on what you can achieve when setting a pack of fierce business and software hackers loose\u00a0in the insurance industry, with backing from the VCs.\u00a0<\/span>\u00a0<\/span><\/p>\n

Long-Term Effects of Mega Trends in Insurance <\/span>\u00a0<\/span><\/h2>\n