General Trends in the Insurance Industry

In recent years, the pace of change in the insurance industry has grown rapidly. Several stakeholders
including consumers and regulators are causing a shift in the way the industry has traditionally
grown. The evolution of technology will play a major role in determining how the fate of the industry
will look like in the time to come. Some of these game changers are highlighted in this piece.
Own Risk and Solvency Assessment (ORSA)
The National Association of Insurance commissioners (NAIC) has developed a process of solvency
regulation for insurers to assess risks at the enterprise level as well as for contingency based
business level risks in a forward looking manner in contrast to a post mortem analysis of events.
State governments will be ready for the implementation of the ORSA Model Act by 2015, whereby
insurers and associated groups of companies will have to file an ORSA depending on certain
premium thresholds. Documentation related to the risk management framework, processes,
controls and governance will have to be compulsorily made as part of the enactment.
Big Data
The key to overcoming the challenge associated with big data is by finding effective ways to securely
store and analyse the large volumes of information aggregated from various sources. There is
heightened awareness among consumers regarding data security and privacy. This will propel
companies to initiate programs to manage big data securely, using a comprehensive enterprise data
governance program. Big data also serves insurers the opportunity to develop targeted marketing,
underwriting and product development processes so as to maximise returns. Strategic methods to
direct research towards data analysis while keeping burgeoning costs in mind are also the need of
the day.
Social Media
It is imperative for any company these days to have a presence on social media. This medium has
both, its benefits as well as risks. Used effectively, it is a platform to communicate with customers
and increasing reach. On the other hand, the dangers of losing reputation due to customer
dissatisfaction communicated through social media, or irresponsible use of these channels by
employees to express their views, which might be misconstrued as those of the organisation.
Companies are now developing policies to effectively mitigate these risks. These policies, however
need to be continuously evolving to keep up with changing technology trends.
Role of Agents
The traditional agent model is now beginning to evolve, since carriers prefer to interact with the
client directly at lower costs and steadier service levels. Carriers have now begun to rethink their
distribution budget allocation and reconsidering the role of agents in the system. It is likely that in a
few years time, customers will interact with agents and carriers using a large number of channels,
mainly through technology. Carriers will also desire to use technology as a means of communication
with their customers owing to lower costs associated with this medium. Agent compensation will be
modified to include only the unique value addition they make for the customer and carrier. Thus, the
role of agents in the system will continue to change, despite the shift in the insurance agent
landscape.
References
2014 Trends in the Insurance Industry, Procliviti. Referenced from: https://.protiviti.com%2Fen-
US%2FDocuments%2FWhite-Papers%2FIndustries%2F2014-Trends-in-the-insurance-industry-white-
paper-
Protiviti.pdf&ei=_TIdVJTgHoaUuATUnICABw&usg=AFQjCNGk9XhYGfrz3zMTgDaQXX_I64bozQ&sig2=
HYY7PKUnv8jeRv7o8RZCFA&bvm=bv.75775273,d.c2E
Agents of the Future: The Evolution of Property and Casualty Insurance Distribution, McKinsey &
Company Referenced from:
https://www.mckinsey.com%2F~%2Fmedia%2Fmckinsey%2Fdotcom%2Fclient_service%2Ffinancial
%2520services%2Flatest%2520thinking%2Finsurance%2Fagents_of_the_future_the_evolution_of_p
roperty_and_casualty_insurance_distribution.ashx&ei=8DMdVNjlA5SjugSk_YHAAQ&usg=AFQjCNHb
FlO9Yv0JYoyBd0AnnqSPHVRB3A&sig2=1di0HvdVQN5dmLqQyznOlg&bvm=bv.75775273,d.c2E