The new year will be filled with opportunities to grow your business, but there will be challenges to look out for when navigating your way through the insurance industry in 2021. Luckily, you’ll be prepared with a list of the most common challenges, so you will be able to get ahead of your competitors to prepare for many of the potential threats to your business. Be sure to look out for these challenges by preparing solutions to keep your business moving throughout the next year, and make sure everyone on your team finds out about these common challenges before it’s too late.
Shifting Balance of Power
According to the experts at PWC, the balance of power is shifting to the consumer. In an in-depth report called Turning Change Into Opportunity, PWC claims, “New and ongoing social trends will shake up traditional business patterns in the insurance industry….” The report says the change in power is shifting towards the consumers due to a rise in consumer expectations. Consumers (people and businesses) are demanding quicker transactions, and more consumers want to work directly with insurance providers. PWC attributes this shift to the rise in technology because the smartphone has equipped consumers with a mobile device that carries out their demands.
Utilizing Big Data Correctly
As technology improves, your competition will have the same advantages and opportunities presented to you and your team, so you need to be prepared. If you’re unwilling to learn how to utilize big data to help you grow within the industry, you will have trouble keeping up with your competitors. PWC reminds its readers that the growth in technology enables individuals working within the insurance industry by making it easier to connect to the internet and analyze large amounts of data without trouble. To utilize this golden gift of technology, you will need to analyze the data collected from consumers. According to PWC, knowledge of this data will help you update your underwriting and pricing.
Remaining on the Cusp of New Technology
According to the Insurance Information Institute (III), the insurance industry is often seen as having a bad reputation for being behind the advancements in technology. There have been fascinating technological improvements within the last few years, and the next year will come with several more. It’s important to stay up to date on what types of new technology are being created to be imaginative in finding ways that these technologies will impact your clients.
Not every new technology needs to be used to make your company grow. However, you may find ways to use your knowledge of drones, the Internet of Things (IoT), and other recent advancements in technology. Being knowledgeable of these developments will help you talk to clients, and your clients will feel more at ease working with someone who understands their concerns.
Understanding Cyber Risks
Along with the growth in technology, there’s one special sector of the insurance industry that provides a new valuable service. Understanding and navigating the world of cyber risks will help you prepare for challenges that could arise with individuals and businesses. Individuals may want insurance to cover their personal losses when they become impacted by data breaches. However, companies will want to be insured against other costly factors. If their data is exposed, they’ll want to cover several of the costs associated with a data breach. According to III, these costs include notifying authorities, notifying individuals, settlement costs, fines, costs of discovering the cause, loss of business, loss of customers, loss of reputation, and cyber extortion.
Dealing With an On-Demand Economy
Another one of the adaptations that must occur to continue growing within the insurance industry in the next year is understanding what it means to ensure individuals in an on-demand economy. On-demand technology impacts more than just the video service you stream at home. For example, you’re able to call a ride share service, and you’re able to reserve a room in someone’s house. These individuals must carry insurance to operate, so you need to be prepared to deal with their unique situations.
According to III, there are “many unanswered insurance questions” in the on-demand economy. Get ready to answer those questions by developing a plan to deal with these unique cases as they arise. At first, each new case might require special attention. Eventually, you should set up a strategy to deal with similar cases as they come to you in the future.
More Catastrophic Events
According to advice from PWC, insurance professionals should be prepared to deal with unforeseeable serious catastrophic environmental events. These events are becoming more severe, and they are happening more frequently. PWC brings special attention to life and health insurance professionals needing to be informed about relevant pollution and air quality levels.
Global Standards for Insurance
PWC mentions the possibility of harmonization between regulators around the world. Creating a standard for insurance practices will impact prices and policies. Stay up to date on world events to prepare for this challenge.
Staying Ahead of Challenges
Keep focused on the goals you’ve set to maintain growth in your sector of the industry. Understanding the challenges ahead for the next year prepares you for success in the same way that clients are preparing for hazards when purchasing a policy. You’re making an investment of time that will pay off when you show colleagues and clients that you’re prepared for any circumstances that might come your way. There’s no challenge too big to handle, so work out a viable solution to overcome any obstacle that comes your way.