5 Trends Impacting Insurance Business Models

This article was first published by StartupBootCamp.


Business models in the insurance industry are undergoing significant changes. Highlighted are five major trends that drive this evolution.

1. The “Tyranny” of Customers

Connected customers expect an efficient (speed, simplicity), engaging (fun, using natural interfaces) and seamless experience (anything, anywhere, anytime). They also ask for services customized to their needs, with the ability to turn cover on and off (personalization, with transparency on trade-offs).

What this means for insurance business models:

  • Differentiation on experience design
  • Provision of on-demand Insurance services

Examples of InsurTech: Slice Labs, Trov, Metromile


2. The Power of Analytics

Data analytics has made significant progress from statistical reasoning to machine learning. It can be leveraged to extract information from large amounts of structured and unstructured data and identify patterns. For instance, the analysis of customer data can deliver valuable insights in terms of segmentation and behaviors. The combination of connected sensors (car telematics, connected home, drones, etc.) with advanced analytics is enabling a dynamic modeling of risks. In the field of automation, cognitive computing coupled with robotics process automation allows for cognitive automation: computer software can collect and extract knowledge, recognize patterns, learn, adapt to new situations and automate human activities (allowing employees to focus on activities with higher value added).

What this means for insurance business models:

  • Improved decision making processes and dynamic risk modeling through data analytics
  • “Smart” automation of processes leveraging cognitive computing

Examples of InsurTech: Nauto, Cape Analytics


3. The Era of Platforms

The “Platformification” trend is about leveraging the power of platforms and APIs in open environments, to create new marketplaces and new ecosystems.

What this means for insurance business models:

  • Development of a platform strategy
  • New partnerships

Example of InsurTech: Instanda


4. The Decentralization of Trust

Insurance companies can leverage new trusted infrastructures (such as but not limited to blockchain technology) to distribute products and interact with customers without intermediaries. In addition, smart contracts can enforce the execution of business logic and support the development of parametric insurance services.

What this means for insurance business models:

  • More direct/efficient services (with less middle-men)
  • Provision of P2P Insurance services
  • Development of Parametric Insurance

Examples of InsurTech: Friendsurance, Guevara, InsurETH


5. The Inclusion of Underserved Populations

This is a global trend and various technologies that can be used to provide insurance services to underserved populations. For instance the combination of mobile technology and blockchain technology allow to deliver micro-payments and micro-insurance services.

What it means for insurance business models:

  • Provision of micro-insurance services

Examples of InsurTech: Bima, Worldcover

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