Insurance industry outlook: Nimble competition has insurers on edge
The insurance industry outlook is filled with new competitors from other industries, posing a challenge to established insurance companies.
In a market that’s largely saturated and also pressured by new digital-focused competitors, insurance companies need to develop additional revenue streams beyond traditional distribution models. The convergence of insurance with other industries is helping some firms reach that goal.
Several global trends are helping to accelerate convergence in the insurance industry. Like other industries, insurance is rethinking its business models as it faces ongoing economic volatility, rapid technology changes, and growing customer expectations.
Here are some examples of insurance companies working across industries to expand their reach, improve customer experience, and drive new sources of revenue.
Embedded insurance: The key convergence trend transforming the industry
By embedding insurance services into sectors such as automobile companies, manufacturing, and HR services, insurance firms can offer personalized and contextually relevant offerings to their clients.
McKinsey & Company noted this convergence trend in an industry report: “Incumbent carriers, brokers, and reinsurers are using their capital base to partner with noninsurers to launch embedded-insurance solutions, often at the point of sale on adjacent products and services (for example, auto or travel).”
One example of this is a solution developed by a leading European insurance group that embeds insurance coverage into an automobile company’s car-rental and car-sharing processes – automatically offering individual pricing to customers as part of the agreement.
The insurer also embedded its services into the electronics of one manufacturer’s vehicles. Now cars can collect data on customers’ driving habits that the company can use to create insurance premiums for those drivers.
With generative AI, a frictionless, fully automated claims process without any paperwork is possible, significantly improving the customer experience.
Cross-industry collaboration: Personalizing employee benefits and beyond
Zurich Insurance Group collaborated with SAP on an innovative project to personalize the employee benefits experience as part of HR services. The proof of concept aims to use HR data from SAP SuccessFactors solutions to offer employees preferred insurance offerings when they need them the most. For example, travel insurance can be embedded right when employees log a holiday, or an agent can be connected to provide advice on additional life insurance when an employee records maternity leave.
“This approach provides contextual protection, ensuring that the right benefits are brought to the right person at the right time,” says Filippo Mazzei, senior product manager for Zurich Integrated Benefits, part of Zurich Insurance Group.
Another insurance industry convergence example is a trial project testing whether collaboration can help an insurer better protect its manufacturing customers. By integrating with the supply chain business network of a leading vendor, the insurer hopes to gain insights into vendors’ performance.
Using the data, the insurer could identify supply chain vendors at financial or operational risk and tailor manufacturers’ insurance policies accordingly.
Building a future-ready foundation for insurance industry convergence
Each of these insurance initiatives requires a foundation of integrated business systems running on an open, modern technology platform with AI capabilities. A solution that unifies diverse data elements – such as financials, supply chain, and HR – creates visibility that helps insurance companies differentiate themselves and grow.
Leveraging advanced technologies such as generative AI, integrated business systems, and modern technology platforms will be crucial for insurance companies looking to differentiate themselves in the market and achieve sustainable growth.
The collaborative approach between insurance providers and other industries is poised to create a transformative impact, paving the way for a more dynamic and customer-centric insurance landscape.
