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Want to know what the leading insurance companies are monitoring on a daily basis? Understanding where to glean competitive data is half the battle!

We analyzed data in Knowledge360Ⓡ and identified the most important trends insurance sector organizations should keep an eye on. Below, we review their underlying causes and what they mean for insurance providers.

STEEP Analysis

First, on our list of trending searches is STEEP analysis. Insurance companies use STEEP, also known as PEST and STEEPL, to gain a broad understanding of external market factors. It explains the underlying rationale for current trends and predicts how markets will react to new products or services. 

STEEP stands for:

  • Social—includes consumers, their behaviors, and cultural tendencies. It can range from demographics to education to health habits.
  • Technological—assess current technologies as well as technologies in development. It also incorporates the research and funding behind technologies and the impacts that new developments could have on strategic planning. 
  • Economic—covers consumer buying power and national or global economies. It will include details such as interest rates, employment and taxes. 
  • Environmental—describes ecological developments, regulations and initiatives. Neglecting this step could result in potential fines, consumer anger and refusal of the right to operate.
  • Political—includes the local political environment and the global climate. It is essential because political barriers can bring expansion or operation to a complete halt if ignored. 

STEEP analysis will vary in focus and depth, but every effective use will direct participants to consider forces not apparent in the company’s daily operations. There are four guidelines for the analysis process to ensure companies get the most out of STEEP.

Those guidelines are:  

  • Identify the underlying trends for each category. Do not superficially describe market factors and move on. 
  • Understand that each category is dependent on the others. As such, many trends will be intertwined. 
  • Relate the trends to current challenges the company faces. Give these abstract trends practical anchor points within the organization. 
  • Use the information to develop actionable strategic plans. Information analysis is only as useful as the action it drives. 

STEEP Analysis is particularly useful for insurance firms in today’s uncertain climate. It gives companies a powerful tool to track market trends through the drastic regulatory changes and technological developments that insurance has seen in the last five years.

In Knowledge360, we see most of our insurance users building dashboards to stay up to date on the latest trends in each of the STEEP categories. This allows them to be ready to jump on changes in consumer behavior faster than competitors and stay ahead of market changes.

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Connected Home/Smart Home

Connected and smart homes are continually moving further into the mainstream, and their inclusion in a record number of Knowledge360 dashboards reflect that. A smart home is a networked home with interconnected devices designed to automate or improve tasks usually done by humans. 

While commonly associated with devices such as voice-controlled speakers and motion-sensing lights, smart homes are capable of much more. They can make homes safer, more efficient and even lower insurer’s risk profiles. Smart homes do this with several key features:

  • Smart smoke and CO2 detectors—are more reliable and informative versions of the traditional detectors. Not only are they often more sensitive due to advances in technology, but they are also self-diagnosing. Meaning, if they require maintenance, or if there is a malfunction, they can alert users immediately. In the case of a threat, they provide detailed information directly to mobile devices, so users can better differentiate between false alarms and actual emergencies.
  • Smart doorbells and security systems—are cameras that seamlessly integrate with mobile devices. One example, Google Nest offers a remote view of the door, communication through the device, and even lock control if integrated with the security system. Similarly, connected security systems allow users to view live feeds, upload important clips and control the cameras directly from their phones. 
  • Thermostats and lights—increase energy efficiency through machine learning. Both allow for programmable schedules to automate light and temperature controls. Once set, they can further adapt to a user’s schedules to reduce energy expenditures. With learning features enabled, Nest estimates that users see an 11% reduction in energy use.
  • Flood Detectors—can alert homeowners to water damage or freezing hazards. As water or moisture levels rise, or as temperatures get low enough to freeze, these sensors send mobile alerts. Residents can respond immediately to warnings and potentially save thousands through prevented repairs and claims. 

The features above improve a home’s efficiency and safety, but the captured data also provides insurers with a better picture of an individual’s risk profile. This gives companies the necessary information to customize insurance policies and deliver what customers need for protection. 

Insurance companies that use Knowedge360 are always staying on top of information about advances or new developments in smart home technology in order to stay in front of changes in homeowners insurance that may be necessary.

Usage-Based Insurance

Customers are demanding more from their insurance than ever before. They are flocking to insurance providers that can offer customer-centric experiences and policies tailored to their needs. Usage-based insurance is a powerful answer to their demands. 

Traditional insurance bases coverage and premiums on age, driving record and car type. Instead, usage-based insurance tracks mileage and driving habits to estimate risk. 

With better data and analysis, particularly telematics from mobile devices, insurance companies can make predictive risk assessments and customize plans accordingly. There are two distinct trends in the usage-based insurance market: pay-per-mile and pay-how-you-drive. 

Knowledge360 insurance users are always looking for ways they can offer the most competitive insurance packages to the marketplace before competitors, so staying on top of trends in how insurance is delivered is paramount.

Pay-per-mile Insurance 

Pay-per-mile insurance delivers the same coverage as traditional insurance policies, but bills based on distance. Premiums consist of a low base rate and variable costs by mile, which will change as mileage fluctuates. 

Pay-per-mile is designed for individuals who drive less than average and is available in nearly all states and through most insurance providers, including Allstate, Nationwide and Progressive. 

Pay-how-you-drive

Pay-how-you-drive (PHYD) insurance takes customization one step further. PHYD uses mobile device data to track several key data points and uses them to estimate a driver’s risk. The most influential to accident risk are:

  • Speed
  • Time of day
  • Rate of acceleration
  • Hard braking
  • Driving location

Insurance companies use data to build more complete risk profiles for specific clients and establish policies accordingly. Clients benefit from usage-based insurance in three ways:

  1. Reduced premiums—most insurance providers will offer an immediate discount for switching to usage-based insurance, and the ongoing rates are lower for most drivers. 
  2. Collective safety—the data collected will give decision-makers, such as car manufacturers and city planners, vital practical information to develop safer cars and roadways. 
  3. Reinforced good driving behaviors—linking increased premiums to specific, dangerous driving habits will make drivers much more aware of their driving decisions. Even the individual switching to usage-based insurance will likely see reduced accident rates as they incorporate better practices. 

With both examples, data privacy is a significant concern. Data collection is heavily regulated, and consumers are generally unwilling to share data unless there is a specific benefit to them. In the case of telematics, programs through most insurance providers are entirely voluntary. For those willing to share their data, the benefits are substantial. 


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Autonomous Vehicles

While it will be some time before consumers can purchase fully autonomous vehicles, driverless cars are a commercial reality. Waymo, which began as the Google self-driving car project, is now offering fully driverless taxi services in the Phoenix area. 

Autonomous vehicles are already presenting a range of insurance challenges and opportunities to providers. Even before consumer availability, Accenture expects insurance premiums to drop by 2026 due to autonomous vehicles

The autonomous vehicle insurance market is still in its infancy, but a market presence now will translate to a better position when consumer driverless cars enter the market. There are three unique coverages that companies can provide to develop a market presence in autonomous vehicles:

  1. Cybersecurity—is a concern as new technology opens new avenues for attack. Hackers may be able to gain unauthorized access to cars, steal data and even damage vehicles. Insurers have opportunities to insure the cars, client data, and the liability for related damages. 
  2. Liability for sensors and algorithms—will cover the manufacturers’ liability for software and communication failure within navigating sensors. Insurers can establish failure rates using already available National Highway Traffic Safety Administration data and accurately quantify risk.
  3. Infrastructure insurance—establishes coverage for malfunctioning and overloading the vehicle control and traffic management infrastructure. 

Development will be challenging, but the companies that begin early will be well-positioned for the incoming tidal wave of personal driverless cars. 

Insurtech

Likely the largest insurance disruptor of the decade, Insurtechs are changing the face of insurance. Insurtechs are new firms seeking to revolutionize insurance by increasing efficiency and reducing expenses with technology. In Q2 of 2020 alone, combined, they raised over $1.2 billion in funding

ZhongAn is an Insurtech worth noting. They were the first Chinese insurance company to sell their policies over the internet, and they have established their place in the market by focusing on three key improvements:

  1. More efficient operations
  2. Faster claims processing
  3. More coverage options

Claims processing is the most drastic improvement of the three. In traditional systems, insurance providers receive claims and manually verify them, often with individual analysts working on one claim at a time. Insurance fraud checks could take days or weeks to complete manually, and it slows claims processing to a crawl.

ZhongAn addressed this by using AI and machine learning to fully automate fraud checking. This created a nearly instant, reliable fraud prevention system

With fraud checking reduced to such a short, effective step, ZhongAn structured their company to receive and approve claims within minutes. Even with health insurance claims, many users will see same-day payment. 

While Insurtechs may not overtake the well-established insurance industry, they are certainly reshaping it. Even established companies will need to incorporate their techniques to stay competitive in this new market. 

Allstate remains an excellent example of an industry giant wholly embracing the insurtech approach. They are using AI to process claims and fight insurance fraud, increasing their efficiency and drastically reducing claim response time. To compete in usage-based insurance, they expanded their options to include Miles and Drivewise.

Not content to keep pace with the industry, Allstate is also seeking to push the technology limits. They are aggressively pursuing AI, predictive analytics and autonomous vehicles with their telematics company, Arity. They currently provide telematic sensors and software to other insurance companies but are ultimately working to improve transportation safety and efficiency globally. 

Most of the Knowledge360 dashboards built by insurance companies look to track new entrants and growth of incumbents in the Insurtech space, often to consider acquiring these new companies to gain access to the technology they are developing.


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Cyber Insurance

In 2019, there were more than 1,400 publicly disclosed data breaches. The average cost of a data breach to a company is $200,000, and 60% of small or medium-sized businesses who experience a data breach go out of business within six months. 

Sensitive data is commonplace in today’s market. Even with the efforts to lock things down, data breaches are a reality. When breaches occur, those companies are subject to government fines and even individual lawsuits. Cyber insurance protects companies’ financial interests during data breaches.

With the rising value of digital information and data security, cyber insurance stands poised to become a massive market, but it has yet to see mainstream adoption. Four challenges have delayed cyber insurance from gaining large-scale availability:

  1. Lack of data on the cost and likelihood of cyber attacks—without this information, insurance providers cannot quantify risk and generally will not pursue policies.
  2. Lack of awareness among decision-makers—has resulted in a lack of demand. Often, the departments who are aware of the risk involved in data management are not able to purchase insurance for the company.
  3. Legal challenges—are present with any new insurance market. In cyberattacks, some jurisdictions still need to establish how concepts such as concrete loss and substantial risk apply to data.
  4. Cyber attack scalability—jeopardizes principles of shared risk. If attackers find a vulnerability in a ubiquitous software, they now have an easy attack vector on many businesses. If the attack brings many companies down simultaneously, this could result in sudden, massive losses for an insurance company.

The cyber insurance market will inevitably expand, but only after these challenges are adequately addressed. Insurance providers that can maneuver through the complex legal and technological developments while limiting their risk exposure will see success in this growing market. 

Staying on top of the changes in cybersecurity breaches, and the threat landscape helps insurance companies better structure cyber insurance or stay ahead of major changes.

Knowledge360Ⓡ for Insurance Industry Competitive Intelligence

Knowledge360Ⓡ is the tool companies need to navigate their evolving markets. Out-of-the-box, it will provide data collection from thousands of legal, technological, environmental and economic data sources. With access to over 600,000 data sources, you can tailor Knowledge360Ⓡ to your exact search needs. Once you have your data, our analysis systems will help your team evaluate all of that data and find the signal in the noise.

Knowledge360Ⓡ is the only competitive intelligence software that combines AI, machine learning and natural language processing to deliver only the most relevant information. And with unlimited customizable dashboards, reports and alerts, your analysts can filter their findings even further to make sure they spend less time on low-value tasks like updating PowerPoint slides and more time on analysis. 

Request a free demo today to see how Knowledge360Ⓡ can keep your company on the cutting-edge. 

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