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The future of insurance

Technology has always been an integral part of our lives, but its influence is about to give insurance an overhaul.

From the cars we drive to the quality of our home security, entertainment systems, white goods and our exercise regimes, there’s very little in our lives that doesn’t involve some level of technology. But until now, our use of technology has had very little impact on the insurance industry. That’s all about to change, however, with experts predicting a number of big shake-ups on the horizon.

 

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Motor insurance

Driverless cars are set to transform the motor industry, completely changing the way insurance is structured. Instead of focusing on a driver, risk will be attached to the vehicle – with safety records ready to take human beings out of the equation altogether. “What you’re about to see here is the age/driving profile disappearing,” says David Williams, Chair of the Underwriting Faculty at the Chartered Insurance Institute, “which means that insurers will need to get to grips with different liabilities instead. My view is that there will be two types of underwriting: one based on the conventional method, with some blended elements to take into account full or partial-AV; the second will focus on a particular vehicle, taking into account its safety rating, cost of repair, age and so on. The benefits for consumers are going to be massive.”

 

"What you’re about to see here is the age/driving profile disappearing”
- David Williams

 

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Home from home

The growing market for the Internet of Things, where apps communicate with the devices in our homes is also fuelling moves towards a more personalised home and contents insurance model. Updates in security systems, for example, will mean that an app will not only alert you to the presence of an intruder in your home, but automatically trigger any alarms and dial 999. It will also be possible to link this to CCTV, so that footage can be taken as evidence for the police – and proof of theft or damage for insurers. “I think you’ll see insurers responding to these changes quite quickly,” says Williams. “In theory, this should make claims a lot easier too – but only as long as insurers integrate these different forms of technology within their own systems. After all, what’s the use of having footage you can send if an insurer doesn’t have the means to view it?”

 

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Damage limitation

With water leakage one of the biggest problems for homeowners, the introduction of gadgets such as water sensors will transform the way consumers deal with leaks and burst pipes, as well as reduce the number of claims. Technology now exists that can sense moisture and operate a shut-off valve within your home. This is likely to prompt insurers to include this type of measure within their policies. “This type of sensor is not mainstream yet,” Williams points out, “but the technology is certainly coming. It’s only a matter of time before it becomes the norm.”

  

  

Image representing Tracking pet health

Tracking pet health

One emerging trend that is already proving popular is the market for pet wearables – where devices communicate with apps to inform owners about their pets’ whereabouts. Extending this to an animal’s health profile is the next step, according to Williams. “If your dog gets good exercise, for example, there’s no reason why a device cannot track that and feed it back to an insurer for discounted premiums.”

 

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POWER TO THE PEOPLE

The trend towards insurtech – where people customise their insurance based on their use of technology, is certainly changing things, says Williams. “Eventually, I think we’ll see the whole insurance model evolve so that it links in with tech manufacturers or comes up with a new and interesting way of doing things. Insurers are going to need to take a close look at their products and services to have that appeal for consumers – and that will certainly include increased flexibility, cutting down on the admin process and generally making things quicker.” An example of such an enhanced offering could be the use of drones to assess flood damage – something that would instantly resolve the delays that occur while an area is cut off. It is likely insurers will also take the initiative and use technology to warn their customers of impending risks, such as sudden weather changes, with texts and instant messaging replacing the traditional post-driven model.

 

Industry speak

  • 68% of insurers plan to use data from customers’ home smart devices to offer more personalised home insurance quotes
  • 71% plan to offer telematics-based pet insurance within five years. This means insurance premiums will be set based on your pet’s behaviour
  • Within a year, 39% of insurers will use robots to guide customers through the policy-buying process 

 Source: The Future of General Insurance/CII & Marketforce

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