Beware: Get tech savvy or miss out on business in 2016

It’s all about big data, peer-to-peer insurance and one key demographic next year, predicts insurer chief

Insurance News

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Independent insurance agents ought to be looking toward millennials and their unique insurance needs if they want to stay ahead of the curve next year.

Greg Isaacs, president of insurance solutions with comparison site CoverHound, has released his predictions for the insurance industry in 2016, with a heavy emphasis on technology and younger Americans.

The four insights from Isaacs include:

1. Millennials will increase in influence and buying power

The insurance industry has catered to Baby Boomers for decades, but Isaacs foresees a looming shift to the Millennial customer base – one that is already well underway.

“In 2016, the amount of Millennials with insurance purchasing power will increase like never before and you’ll begin to see the industry finally recognize this shift and start marketing to this group of people,” he said.

“That could result in more resources invested in online customer service operations versus call centers or adjusting distribution methods to more accurately match Millennials’ purchasing habits, which are increasingly on mobile devices”

2. Big data will continue to build bridges with insurers

Insurance and data analytics companies have already developed close relationships, and two – Willis Group and Towers Watson – have even agreed to a merger.

Isaacs sees that relationship only intensifying next year, with new tools provided to insurance companies to help them monitor driving and home activities. There is a legitimate debate on privacy to be had here, but on the bright side, responsible policyholders should be rewarded.
“Let’s say you don’t have good credit but data shows you’re an excellent driver,” Isaacs said. “There’s a good chance your rate will reflect the data.”

3. Renters insurance will spike in popularity

Another evidence of Millennials’ growing importance to the insurance marketplace is the rise in demand for renters insurance. Traditionally ignored or frowned upon by insurance companies due to high risk and low premium, renters insurance has grown in popularity as Millennials continue to avoid the housing market.

Now, however, there is opportunity to make this line successful.

“Millennials are coming onto the scene fast and will be new lifelong customers for insurance companies and the smart providers will be those who look to build connections with this group of people now through renters insurance,” Isaacs said.

“When they decide on you, Millennials tend to be very loyal and have equity in their decisions. Plus, people are buying homes later and renting longer than ever.”

4. Peer-to-peer insurance will become more relevant

The peer-to-peer insurance model is predicated on the same principles as the first insurance concepts, Isaacs says. As such, it has a future with the consumer market.

“Originally insurance was created to protect farmers that came together as a collective group, then it was like-minded auto makers and so on,” he said. “This same idea, with a modern twist, is taking hold in 2016 and you’ll begin to see certain innovators begin to build the systems and infrastructure necessary to create the peer-to-peer insurance marketplace.”

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