What is in store for insurtech and insurance in 2020?

The life insurance sector in the UK is failing to make itself relevant – with our research showing 59% of people in the UK are living without this protection. In 2020, insurance, specifically life insurance, will need to innovate in both accessibility and personalisation.

I believe that accessibility will be the biggest area of opportunity in 2020, as there’s a huge gap between those with a lower income who need life insurance and those who are actually covered. Without access to tools like a financial advisor or greater financial literacy, this segment is underserved and as an industry we need to make our products more accessible to all customers, no matter their income. We will also see greater strides in personalisation, making products more relevant to each specific customer as digital capability continues to improve. For example, we incentivise our customers by lowering their premiums when they make better lifestyle choices – starting with abandoning cigarettes or better still, quitting tobacco and nicotine altogether.

The life insurance sector in the UK is failing to make itself relevant – with our research showing 59% of people in the UK are living without this protection. In 2020, insurance, specifically life insurance, will need to innovate in both accessibility and personalisation.

I believe that accessibility will be the biggest area of opportunity in 2020, as there’s a huge gap between those with a lower income who need life insurance and those who are actually covered. Without access to tools like a financial advisor or greater financial literacy, this segment is underserved and as an industry we need to make our products more accessible to all customers, no matter their income. We will also see greater strides in personalisation, making products more relevant to each specific customer as digital capability continues to improve. For example, we incentivise our customers by lowering their premiums when they make better lifestyle choices – starting with abandoning cigarettes or better still, quitting tobacco and nicotine altogether.

In 2019, the Life Insurance and Protection market has shown a dramatic increase in new business being fulfilled on intermediary platforms. We have also seen previously under-served groups of customers, like smokers and renters, able to access protection better mainly by the use of technology. There have been new tools created to help advisers identify need thus allowing them to protect more clients. This work is important in driving out cost and finding customers who need protection.

Despite this, a number of major structural problems remain in the industry which will only be solved by business model innovation supported by technology. We estimate that 75% of the new policies written in 2019, even those using the smartest technology, will find their way back to legacy systems for administration over their lifetime. In other words, it’s a great start, but then back to costly telephone and paper, with no self-service, low engagement and little opportunity to stay in touch with customers in a meaningful way.

The adoption of digital underwriting is progressing too slowly, and too often risks get kicked out of a ‘straight-through’ journey into a costly and frustrating manual process. This is a major turn-off for advisers and customers alike.

In 2020 and beyond we expect to see an increasing emphasis on digital underwriting and getting more people on risk immediately. All the big reinsurers are investing in this space, but it remains to be seen who the winners will be.

The macro-economic issues, such as Brexit, and indeed the slow-down in the property market will also have an impact on protection. As we’ve seen in previous economic cycles, mortgage brokers are seeing fewer house completions and the process is taking longer, so we’ll see an increase in protection business written by them to replace the lost income.

There is no doubt that we will see new and improved protection offerings from banks, as they have a big customer base and the means to interact with them across various channels. Don’t be surprised to see a significant increase in protection sold in this way.

Aside from banks, and their various sub-brands and partners, I’m not certain we will see much increase in direct-to-consumer business in the coming years. Protection is usually sold not bought, and doesn’t renew annually, so the aggregator model is still only suitable for a small portion of the market which won’t change.

On the other hand, I do think we will see a continued increase in group protection sales. We’re seeing the development of simple ideas, great on-going customer engagement and insurers taking advantage of people’s interest in health and lifestyle - putting it at the heart of their proposition. Businesses increasingly want to look after their people for the benefit of all. Delivering these smart new group schemes with technology making it easy will enable this growth.

And of course everybody is waiting to see what Amazon do! It is only a matter of time.