This article is part of Carrier Management’s series on the Future of Insurance.
Guy Goldstein, Co-Founder and CEO, Next Insurance, believes an insurance industry today lacking personalization needs to move to one that tailors products to business customers.
Q: What major changes do you see on the horizon for the property/casualty insurance industry in the next 10 years?
Goldstein (Next Insurance): When we look at the future of insurance, there are two parallel trends that can be seen. The first change comes from technology, which will impact risk. The second change is how insurance is going to be serviced to customers.
The Technology Shift. Technology is expected to advance exponentially in the next 10-15 years, increasing by thousands of percent in its capabilities compared to what we see today. There are many future predictions that are becoming more real every day, such as the likelihood that automation will remove humans from the driver’s seat of vehicles, the printing of human organs, which reduces medical costs significantly, a highly intelligent home that can protect itself from potential harm, and many more.
In such an environment, the risks will dramatically decrease, as will the costs to remedy these risks, ultimately decreasing the cost of insurance. To modernize, insurance companies will have to reduce their fixed cost to be able to cope with the reduction in premiums.
Serving the Customer. The insurance industry lacks personalization, with risk factors and underwriting still relatively generic. As insurers are able to compile more sophisticated and in-depth data about risk, it will be easier to tailor the insurance needs to the specific customer. In business insurance today, we still have catchall insurance types such as general liability, inland marine, employee liability, etc. What we should have is insurance that is tailored to a plethora of subcategories, such as insurance for an Indian restaurant, insurance for a wedding photographer or insurance for a litigation lawyer.
There is little doubt that the entire insurance process will be direct and online in the future. There will no longer be the need for a mediator (in this case, an agent) between the insurance provider and the customer, as this online system will enable the customer to buy, maintain and handle claims all in one place.
The insurance system today is built on agents, actuaries and underwriters, who will be replaced with simple-to-use online interfaces, algorithms and artificial intelligence. With less personnel required and new technologies introduced, the costs of insurance will dramatically decrease, freeing up more of the insurance premiums to pay claims as opposed to serve the internal needs of the insurer.
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With less personnel required and new technologies introduced, the costs of insurance will dramatically decrease, freeing up more of the insurance premiums to pay claims as opposed to serve the internal needs of the insurer.—Guy Goldstein, Next Insurance
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