The insurance industry faces a significant talent gap, with nearly half of its workforce expected to retire in the next five years, according to experts from SAS. This impending shift is prompting companies to invest in artificial intelligence (AI) and data-driven technologies to mitigate the loss of experienced professionals.
SAS predicts the growing trend of “omni policies,” which would allow customers to pay a single premium for AI-powered coverage across various insurable domains, streamlining the insurance process and broadening its reach.
A shift toward “data for discounts” models is also on the horizon, where insurers will offer lower premiums to customers willing to share personal data, while raising costs for those who prioritize privacy. Wearable health technology will play a pivotal role in refining risk assessments by providing real-time data, though concerns about data security and ethical considerations will continue to challenge the sector.
In response to changing customer needs, insurers are likely to collaborate with non-traditional stakeholders, such as smart home technology providers, to expand their market presence. However, climate change remains a significant challenge, with insurers expected to further limit homeowner and commercial property coverage in high-risk areas.
To address the growing insurance protection gap, currently valued at $1.8 trillion, public-private partnerships may become more prevalent. Additionally, regulatory compliance will play a critical role in AI adoption, particularly in underwriting and claims processing. In the European Union, insurers will need to adjust to the EU AI Act’s risk-based classification, emphasizing AI governance, transparency, and bias reduction.
Synthetic data is also expected to enhance actuarial pricing, enabling insurers to incorporate external market data for more accurate risk assessments. As regulatory investments stabilize, insurers will shift their focus toward AI-powered solutions, leveraging generative AI for underwriting, fraud detection, and customer engagement.
These technological advancements will be crucial as insurers navigate an increasingly complex market, shaped by talent shortages, climate-related risks, and evolving regulatory landscapes.
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