TransUnion’s 2022 Insurance Trends and Outlook Report paints a rosy picture for digitalization initiatives across P&C and life insurance – thanks to a lot of headroom.
Only 32% of 2,750 U.S. consumers surveyed by the company in fall 2021 had been offered telematics-based insurance, the company said. Of those that were offered, 49% took the offer, and 64% have stuck with it.
The company’s research found that customers are presenting fairness and equity concerns about insurance, particularly around the use of credit-based insurance scores. At the same time, they are wary of things like Internet of Things devices for their homes, with only 33% saying they would allow insurers to install such items.
As a result, TransUnion says, insurers need to make a concerted effort to present consumers with transparent information about how and why their products are priced.
“On one hand the insurance industry will need to meet the increased demands for digital processes. On the other, it must educate the public and ease concerns over the use of credit-based insurance scores and externally-sourced data, which are helping to drive that demand,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business, in a statement. “I suspect this was driven by concerns over privacy, which means insurers will need to convince consumers that telematics is about monitoring driving behaviors and the condition of home appliances, like water heaters and furnaces, to ensure people’s safety—not gathering their personal information.”
That’s going to be especially important in commercial lines, where third-party data powering pre-fill is going to be crucial in the coming year, TransUnion predicts. Accelerating the underwriting process using as much third-party data as possible is flagged for commercial lines and life insurance alike.
“While not all customers will qualify for life insurance policies based on third-party data alone — a subset may be referred to traditional underwriting to have their applications completed — that still leaves a substantial majority of applicants who can enjoy a tremendously improved customer experience and easier access to financial security, which is significant given the majority of consumers surveyed cited family protection or financial management as the most important factor in their decision to purchase life insurance,” the report says. “Current underwriting processes for small businesses, which remain high-touch for both agents and customers, is widely seen as unsustainable. The proliferation of accurate, scalable third-party insights detailing a small business’s historical information, assets and exposures enable automation and adoption of personal lines-style processes.”
