Ready for a little competition? New technology startups are poised to alter the insurance industry playing field.
Technology continues to change how we live, work, and play every single day. And with new tech comes new rules. So, what’s next? Well, according to a recent World Economic Forum report, there are some newcomers to the financial services scene poised to introduce new tech that will change the game in a big way.
In Julia Greenberg’s Wired piece on the report she explains that these ‘[tech] upstarts are reshaping our experiences of payments, investing, lending, trading and raising capital.’ However, she adds that financial institutions have failed to respond and are now ‘watching the new guys encroach on their turf and take money from their pockets.’ And here’s the punch line: according to both Julia and the WEF report, the insurance industry might be their next target.
Trust And Transparency
Who do you trust more as an unbiased source, your bank or your Internet search browser?
According to WEF, public ill will toward insurers in general coupled with ‘high levels of trust enjoyed by many tech firms’ could help propel new entrants into the industry. This should come as little surprise, considering how today’s customers interact with technology. Online price aggregators like Google Compare, support customer empowerment and the independent consumer research that comes with it. In fact, Insurance Journal claims your average insurance customer is already there with 71 percent conducting their own online research prior to purchase.
Ten years ago transparency was the rule and customers could easily get all the information they needed from agents. But today many agents are fearful of being replaced by technology and hold information close to the chest.
Though customers are regularly conducting research on their own, there’s still something to be said for talking to an expert. Insurers who embrace the fact that customers are now more informed can use this to their advantage, building trust as a customer’s confident guide.
Beat Them At Their Own Game
Increasing transparency and trust between agents and customers isn’t the only way to compete with financial technology (aka ‘fintech’) upstarts. While outsiders may present a real threat to current industry players, much of the technology examined in the WEF report could also spell opportunity. ‘Tracking devices [think fitness trackers], along with smart cars and homes, may lead not just to safer lives, but more personalized insurance’ according to R. Jesse McWaters, leading author of the report. ‘That’s because in theory, if insurance companies can better track what you do, when, where and how, they could proactively manage your risk – and charge you accordingly.’ Sounds like this could work in your favor after all.
As our world becomes more tech dependent and data driven, old-school industries like insurance will need to roll with the punches. By accepting change and putting their best foot forward as trusted experts, insurers can stay a step ahead of fintech upstarts in the battle for new insurance consumers. Are you up to the challenge?
What fintech trends have you experienced first hand? Tell us on Twitter @Fortegra.