Disruptive Forces Impacting the Insurance Industry in 2021

A look at disruptive forces impacting the insurance industry in 2021 and beyond.

As insurers re-engineer their offerings to find renewed resilience and stability in the flux of global uncertainty, industry leaders have the opportunity to evolve legacy environments and redefine differentiated value. Despite new challenges that have emerged out of an increasingly complex and volatile competitive landscape, the insurance industry is presented with immense innovation potential. With high technology adoption, data streams are multiplying — and as consumers are increasingly plugged in, new opportunities are emerging. Agile innovators able to integrate transformative technology, behavioral economics, and collaborative ecosystems will set the pace for change.

What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Gain more insights from ITONICS’s industry perspective.

Our latest report unpacks B2C insurance in the digital age, exploring contemporary trends and future scenarios to uncover innovation opportunities across all horizons.

Through rigorous contextualized environmental scanning and AI-powered trend scouting made accessible online through our modular cloud software, we explore more than 30 trends that are impacting B2C insurance. In this way, we provide an overview of the drivers of change with a specific lens on the insurance sector and look at disruptive forces impacting the industry in 2020 and beyond.

Insurance Trend Map

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A balanced perspective

To make sense of the future, even the seemingly sudden shifts, we believe that organizations must take a holistic approach to trend management, forecasting and industry analysis — balancing both an outside-in and inside-out perspective. This is to say that for organizations to build winning strategies, they must respond to changing consumer expectations and emerging tech and at the same time leverage internal strengths adequately to take advantage of the most promising opportunities.

Outside-In: An approach to strategy development that reads and responds to market dynamics, customer insights, and emerging technologies to create differentiated value.
Inside-Out: An approach to strategy development that is internally-focused, leveraging the organization’s capabilities and strengths as a primary point of departure to create differentiated value.

This provides decision-makers with all the contextualized information needed to anticipate developments and make more informed choices in the present about the future.

From the “Outside-In”

Based on an ‘outside-in’ analysis, our research takes the impact of global social, technological, environmental, economic, and political factors (STEEP) into account. Highlighting key trends at play, we explore six distinct themes as forces shaping the future of insurance.

These six core themes to uncover and demonstrate the impact and potential incumbents have to embrace big data and analytics, digitize distribution and operations, and enhance customer engagement.

Forces shaping the future of insurance

Digital transformation will shape the customer experience:
Digital transformation in the insurance industry is no longer a pipe dream. With the help of straightforward technological innovations like application programming interfaces (APIs) and Robotic Process Automation, even incumbents weighed down by outdated legacy systems can board the digital transformation train, leading to Seamless User Experiences that offer consumers unprecedented ease of use.
Data management and privacy concerns will redefine brand-customer interactions:
In the age of the Internet of Things and social media, insurers have access to new data sources that increasingly inform underwriting best practices and allow for more personalized policies and more convenient service. However, this access comes with heightened Data Privacy Concerns and gives rise to the need for meticulous Data Governance.
Flexibility will democratize and disrupt insurance models: With consumer demographics shifting and traditional life stages being disrupted, there’s a growing need for more flexible, more accessible insurance offerings. In response, Usage-Based Insurance options have proliferated, as have Modular Insurance Models that allow consumers to tailor their policy to their unique lifestyle needs.
Positive reinforcement and behavior shaping will transform the industry
The insurance industry is seeing a gradual shift from risk management to Risk Prevention: With the proliferation of data sources, insurers are adopting strategies like predictive maintenance and Behavior Incentivization to encourage risk-reducing behaviors like careful driving and healthy habits.
Hyper-connected communities will be a key differentiator: Brands that build highly-engaged Communities that unite people around a shared purpose that goes beyond the brand itself foster lasting bonds of loyalty. Moreover, in the wake of various social justice movements around the world, Human Brands that take a clear stance on current events resonate with consumers with similar values.
Lifestyle ecosystems will drive new revenue streams:
Consumers have come to expect seamless convenience in their interactions with brands, with Brand Partner Networks creating integrated ecosystems that holistically address their lifestyle needs at numerous touchpoints. These types of diversified value propositions are increasingly facilitated by Mergers and Acquisitions particularly with InsurTech startups that provide incumbents with new technological capabilities.

From the “Inside-Out”

In this report, we provide a snapshot of the future to elaborate on plausible outcomes trends and emerging technologies will have as they develop and mature in-market through various scenarios.

Adopting an ‘inside-out’ approach, we detail some implications for innovation from an industry standpoint. By evaluating the impact of these different scenarios on sector-wide strategies, innovators can identify potential whitespaces that will help them engage in authentic dialogues with consumers and realize winning strategies.

Implications for Innovation

The crisis will continue to put pressure on performance: Investment in a value protection strategy alongside a clear, collaborative acceleration roadmap is critical to survival. For incumbents to withstand the crisis – and in turn, transition to deliver greater value – they must realign innovation priorities and build consensus across their organizations.
The benefits of digitalization can no longer be denied: Digitized claims processes and robotic process automation have shown to lower costs by 20-40% while delivering productivity enhancements. But digitalization is much more than just digitizing the legacy business. Innovators must accelerate the early identification of game-changers such as signals, emerging technologies and trends and market activities to gain competitive advantages and new revenue and value-producing opportunities.
The practice of innovation must remain inherently human-centric: Looking forward, industry leaders that want to deliver a new era of value creation will have to evolve to establish authentic, purposeful, and emotional connections with customers. An integrated view of all data points and activities not only allows for stringent planning and implementation of innovations but grounds efforts in validated insight for strategic buy-in.

Courageously innovate

In order to respond appropriately to these implications for innovation, innovators require the right set of tools to determine their next steps. This report is aimed to equip industry leaders with the tools, insight, and inspiration to see the horizon more clearly, tackle the challenges ahead, and develop cutting-edge strategies to emerge as winners. To inspire innovation, we provide an adaptable framework of recommendations and highlight the changes incumbents could make to balance risks and maximize opportunities.