As the 2020s begin, the insurance industry is facing a huge shift in dynamics. This decade will see changes to the workforce, technology and operations from the top down – and now is the time to prepare and plan to ensure your insurance business stays healthy and profitable as the future descends.
As we begin 2020, it’s easy to look back on the modern insurance industry and see a fairly straight line of advancement – even a bit of stagnation – but that hasn’t always been the case. Carriers date back thousands of years and have a rich history of adaptability and innovation.
Insurance in some form has existed since before written history. Ancient Chinese and Babylonian traders nearly 4,000 years ago offered insurance policies to protect their goods as they traveled overseas; Greeks and Romans had insurance guilds that covered the funeral costs of the deceased and cared for their family; and the first known insurance contract (that was not also bundled with a loan) dates to 1347 in the Genoa region of Italy.
Just over the past 300 years, insurance has shown tremendous growth to match the technology and needs of its time:
- 1700s: In a time when one blaze could raze a city block, the need to protect urban investments from the rampant spread of fire required a modern solution to a big problem. Benjamin Franklin’s Philadelphia Contributionship for the Insurance of Houses from Loss by Fire became the first mutual fire insurance company in the U.S. in 1752 – and is still in business to this day.
- 1800s: As new risks emerged, insurers offered policies to protect against them. In 1864, The Travelers Insurance Company sold its first accident policy for 2 cents; in 1887, it sold the first auto insurance policy; and in 1889, it offered workers’ compensation. (This insurer, too, is still in business.) The desire to protect assets with insurance led to a market boom in carriers. This boom also invited corruption, such as frauds selling phony policies, carriers with premiums too high for anyone but the ultra-rich and competitors attempting to form monopolies.
- 1900s: The 20th century saw the introduction of aircraft liability insurance, technology insurance, even lunar exploration insurance – all to match the modern needs of society. The federal government passed the Social Security Act in 1935, which, in addition to providing unemployment compensation and retirement benefits, acted as a warning for insurers to improve self-regulation or risk more government oversight.
The P&C insurance industry has blossomed into a diverse marketplace, with insurers protecting businesses, properties and goods from damage and loss. Having an insurance policy is no longer a luxury but a necessity. New policies and coverage options are making inroads as concert vendors, organizers and even engaged couples look to insure their events from weather and other disruptions.
What can we expect as insurance carriers continue to evolve? It’s all about the data. With the demand for insurance rising, carriers need more efficient ways to input information, assess risk and process claims. Everything from underwriting to QA audits are becoming more sophisticated thanks to artificial intelligence (AI), big data and automation.
Continue reading in our free whitepaper download, “The Insurtech Revolution: The Trends and Technology Changing Insurance in the 2020s”: