Insurance: the top 10 trends to look for in 2021
After an unexpected year 2020, with a global crisis hitting hard and forcing all companies to test their resilience and rethink their business models, 2021 also promises to be a turning year for the financial services industry and especially for insurance companies. In a recent article published on its website, Accenture shares – and analyzes – the 10 insurance trends that will reshape the sector.
Jean-François Gasc (Managing Director – Insurance, Strategy Consulting, EALA, Accenture) first explains: “at the start of 2020, few people foresaw the havoc that the COVID-19 pandemic has triggered around the world. As we look ahead to what 2021 might hold, it is important to remember just how unpredictable our world really is. If it wasn’t, we wouldn’t need insurance. Our livelihoods depend on uncertainty”.
Here are the key trends that could impact the insurance industry in 2021, according to Accenture:
#1 The rise of health and wellness services
Health and wellness topics are now at the forefront of customers’ concerns: insurance companies have boosted their medical and life cover products by offering an array of digital health and wellness services. The expert adds: “carriers that quickly establish a strong presence across the health ecosystem will gain a big advantage over competitors”.
#2 The advent of phygital
Digital services as well as digital distribution channels are taking over as the primary point of customer engagement. Yet, the inputs of physical channels and its experts remain relevant for advice on key points such as complex decisions and offerings. “Digital services that are seamlessly combined with physical experiences will emerge as the key differentiator when consumers buy insurance,” explains M. Gasc.
#3 Broadening their scope
Digital is bringing new opportunities to insurers, allowing them to expand beyond their traditional markets. The Accenture expert expects carriers to announce surprising partnerships, in order to broaden their revenue base.
#4 More niche products
During the pandemic, insurers decided to launch several innovative risk-management offerings. In the months to come, demand for tailored products, such as business-continuity cover for SMEs, cyber-threat production, event-cancellation policies, etc., will continue to rise. “Moreover, interest in insurance products aimed at specific demographic groups, such as young adults or retirees, will be especially strong, presenting partnership opportunities between incumbents and Insurtechs,” comments Jean-François Gasc.
#5 Giants will grow
In the past years, new and innovative insurers have gotten a lot of attention and attracted substantial funding. On the other hand, traditional players will use their asset strengths and in-house resources to secure new revenue opportunities. According to Accenture, the insurance industry is likely to see some significant mergers and acquisitions in 2021.
#6 Trust is more essential than ever
Consumer trust continues to be a critical feature in business in 2021: they expect providers to give them a good service, but also require them to protect their personal information. The expert adds: “insurers that are perceived to have breached the trust of their customers risk substantial reputational damage. Trust has become non-negotiable”.
#7 Betting on sustainability
Insurers will also have to manage the global trend of sustainability: they will come under pressure to demonstrate their support to sustainable initiatives addressing climate change, but also environmental pollution and social injustice. “By doing so, insurers will strengthen their brand and avoid having to catch up with regulatory requirements that may be mandated later,” comments M. Gasc.
#8 The race to “Green”
Fossil fuel keeps on losing favor among regulators, shareholders and obviously consumers. Therefore, insurers will step up their commitments to green energy and some of them will probably cut ties with fossil fuel companies. For instance, auto insurers are likely to introduce more incentives for their customers to switch to electric cars…
#9 Fixed premium lapse
Consumers are enjoying the flexibility as well as the cost-savings offered by new and innovative pay-as-you-go insurance services. Accenture expects “at least one major auto insurer to drop fixed premiums to switch to usage-based fees”.
#10 Cryptos rise again
Carriers will keep on increasingly looking at the possibility of adding new asset classes to their portfolios… and cryptocurrencies are already endorsed by a growing number of financial services companies.