Insurance for assets in the metaverse, hyper-personalized products, and pay-as-you-drive premiums are just some things that could shape the future of insurance. The industry is ripe for further disruption, even as technology providers are already changing how we sell, buy, and create insurance.
Chris Cornell (pictured), partner, audit, and national sector leader for KPMG Canada spoke to Insurance Business about some of the industry’s key trends. One is the growing possibility of insuring digital property like non-fungible tokens or NFTs, blockchain-based assets representing digital files such as images, video, or text.
“It’s a great opportunity to think beyond general insurance that everyone is used to seeing. I know a couple of carriers have had some initial discussions internally and thoughts around it, and reinsurers are thinking about it as well,” Cornell pointed out.
More and more organizations are looking to cash into the crypto art market. For instance, late last month, the Canadian National Exhibition launched an NFT which features an archival image of a tightrope walker balancing a visual model of the novel coronavirus and the COVID-19 vaccine. The 3D art portrays the balance Canadians must strike amid the lingering uncertainty of the pandemic.
The key to unlocking insurance for NFTs lies in pricing its value. “As we get more clarity on the value of NFTs and other digital assets in the metaverse, the market for those products will also become more apparent. People will become more concerned about their value, so we’ll look to put protection on those assets.
“Underwriters might struggle with understanding the value of those items, but because there will be a market for it, there’s an opportunity for niche players or specialty insurers to consider it,” said Cornell.
Scam artists and thieves also realize the value of digital assets, making cybersecurity critical for the market to continue its growth. Blockchain research firm Elliptic said more than CA$130 million (US$100 million) worth of NFTs were stolen between January and July this year, revealing a new front in crypto’s hacking problem.
Carrier’s relationships with their customers are also shifting rapidly amid the industry’s digital transformation.
“The pandemic was a significant catalyst for people to do more things digitally. But in Canada, we haven’t seen significant uptake in the purchase of insurance digitally because the broker network is so well entrenched here,” Cornell noted.
“But with brokers looking to embrace digital technology and recognizing that it can be a more efficient way to interact with their customers, we’re also seeing a shift in customer adoption.”
The first part of this shift is more customers wanting to engage in insurance on their own time versus going to a broker’s office within a nine-to-five context. People are taking more ownership of their banking and investments and want similar flexibility and personalization in their insurance.
“The second part is we’ve got a significant segment of the population who are putting off life-changing events that would indicate that they require insurance – whether that’s the purchase of a first home and a first car,” Cornell continued. Carriers need to capture those clients in the early stages to be able to grow with them.
Cornell also pointed out the sharing economy as a massive catalyst for changing customers’ insurance needs. “Will insurance cover the asset as it’s working, or will you have personal insurance that covers you if you want to access a network of rideshares? That’s something that will need to be sorted out within the industry,” he told Insurance Business.
Read more: Digitalization is not ‘IT spend
Open banking offers carriers an avenue to better understand their customers’ financial situation – provided those customers have consented to the use of their data – and align their offerings accordingly.
“There’s an opportunity for insurers to send push notifications, identify these life events that would require protection, and provide a more personalized approach to customers.
“That’s where people would like to get to with their insurance. They want the flexibility of having information at their fingertips, knowing that carriers are thinking about their well-being. Are we there yet? No. But it’s what we expect to see in the next few years,” said Cornell.
The digital mandate that many insurance companies have embraced is driving better customer experiences. Brokers and carriers are utilizing more digital tools and partnering with insurtechs to boost their capabilities. To aid the digital adoption process, carriers should simplify policies to make them easier for customers to understand, Cornell said.
“There’s a lot of jargon and legal terms within an insurance policy. If you can make it so that customers can readily understand their coverage, that will lead to quicker digital adoption, quicker product approval and pricing, and a smoother client onboarding process,” he explained.
“It’s fair to say that it hasn’t been the swiftest of adoptions. But I do think we see insurers invest in more technologies. ‘Digital first, digital now’ is the right way to frame it. It will continue to evolve, but it’s coming for sure.”
