The future of insurance may be shaped by a number of factors, including pay-as-you-drive premiums, hyper-personalized products, and insurance coverage for assets that exist in the metaverse. Even while suppliers of technology have already altered the ways in which we sell, purchase, and produce insurance, the market is ripe for additional upheaval and should expect it.
Insurance Business had the opportunity to speak with Chris Cornell (pictured), partner, audit, and national sector leader for KPMG Canada. Mr. Cornell was asked about some of the most important changes happening within the company. One of these is the expanding likelihood of being able to insure digital assets such as non-fungible tokens, also known as NFTs. These are blockchain-based assets that represent digital files like photographs, videos, or text.
Everyone is used to thinking about general insurance, but this is a unique chance to consider outside of that box. Cornell mentioned that “I know that a couple of carriers have had some first discussions internally and thoughts around it, and that reinsurers are thinking about it as well.”
Insurance based on NFTs
There has been an uptick in the number of businesses attempting to capitalize on the cryptocurrency art market. For example, at the end of the previous month, the Canadian National Exhibition released a new novelty food item (NFT) that incorporates an archive image of a tightrope dancer balancing a visual representation of a novel coronavirus and the COVID-19 vaccination on his or her head. In the face of continuous unpredictability brought on by the epidemic, the 3D artwork depicts the delicate balancing act that Canadians must do.
Pricing the value of the insurance will be necessary in order to unlock it for NFTs. When we have a better understanding of the worth of NFTs and other digital assets in the metaverse, we will also have a better understanding of the market for those items. As more people become concerned about their value, we will investigate the possibility of providing protection for those assets.
Cornell stated that “underwriters might struggle with comprehending the value of such products,” but that there is an opportunity for niche players or specialist insurers to explore it because there will be a market for it.
As a result of the fact that con artists and thieves are aware of the worth of digital assets as well, cybersecurity is essential for the further expansion of the industry. Elliptic, a blockchain research company, reported that more than CA$130 million (US$100 million) worth of NFTs were stolen between January and July of this year, suggesting a new front in the hacking crisis that has been plaguing the cryptocurrency industry.
Changes in interpersonal relationships
Amid the rapid digital revolution of the sector, the connections that carriers have with their respective customers are also undergoing significant change.
People did more things digitally as a direct result of the epidemic, which was a big stimulus. But in Canada, we haven’t seen a major rise in the buying of insurance digitally because the broker network is so firmly established in this country, as Cornell pointed out.
“But with brokers trying to embrace digital technology and realizing that it can be a more efficient way to connect with their clients, we’re also seeing a shift in customer acceptance,” you say. “This is because digital technology can be a more efficient way to interact with their consumers.”
The first aspect of this transition is represented by an increase in the number of consumers who prefer to engage in insurance transactions on their own time rather than going to a broker’s office during normal business hours. People are taking a more active role in managing their banking and investments, and they want the same level of flexibility and personalization from their insurance providers.
“The second component is that we’ve got a big segment of the population who are delaying life-changing events that would suggest that they want insurance,” continued Cornell. “This might be anything from the buying of a first home to the purchase of a first car.” In order for carriers to be able to develop with their customers, they need to win their business at an early stage.
Cornell also mentioned the sharing economy as a major factor that is affecting the requirements that customers have for their insurance. “Will the insurance cover the asset while it’s functioning, or do you have personal insurance that covers you in the event that you want to access a network of rideshares? “That’s something that will need to be dealt out inside the business,” he said to Insurance Business. “That’s something that will need to be worked out within the industry.”
“Digital first, digital now” in other words.
Open banking provides carriers with a means by which they can better understand their clients’ financial situations and align their products accordingly, provided that their customers have consented to the usage of their data. This is a prerequisite for open banking.
“There is an opportunity for insurers to deliver push notifications to their consumers, identify these life events that would require protection, and provide a more tailored approach to their business with those customers.
“That’s the point where most individuals would like to be with their insurance,” she said. They want the versatility of having information at their fingertips, and they want to know that their carriers are thinking about how their health will be affected. Is our destination in sight? No. However, this is something that we anticipate happening in the next years,” added Cornell.
Better experiences for customers are being driven by the digital mandate that a large number of insurance companies have adopted. In order to expand their capacities, insurance brokers and carriers are increasingly making use of digital technologies and forming partnerships with insurance technology companies. According to Cornell, in order to facilitate the process of digital adoption, carriers should streamline their regulations so that they are simpler and easier for customers to comprehend.
“An insurance policy contains a significant amount of industry jargon in addition to legalese. “It will lead to speedier digital adoption, quicker product approval and pricing, and a simpler client onboarding process if you can design it so that customers can clearly comprehend the coverage that they have,” he stated.
“I think it’s safe to say that this adoption process hasn’t exactly been the quickest. However, I believe that we are seeing insurance companies invest in more technologies. The most appropriate way to phrase it is as “digital first, digital now.” It will continue to develop in new ways, but you can count on its arrival.”