We still live in a world where traditional insurance policies are a necessity. The millions of home owners who require building cover, and the millions of car owners who still require motor insurance, for example.
And while the market will continue to serve these traditional needs, we need to recognise that changes in behaviour, environment, and technology – in some cases, dramatic changes – have highlighted new insurance needs, and new challenges to which the industry has needed to rise.
In this post, we’ll take a moment to examine these changing circumstances, and how they may give rise to new niche insurance opportunities over the coming year and beyond.
Experience over Stuff
One of the commonly held notions about modern consumerism, and how it differentiates from previous eras, is the move away from the purchasing of ‘stuff’ towards spending on ‘experience’.
It’s likely due to a variety of factors, among them:
- Millennial numbers surpassing ‘baby boomers’
- Lower disposable income
- Reduced lending opportunities
- The influence of social media, promoting aspirational lifestyles over material commodities
- World events & unpredictable socio-political climates
Whatever the reasons, these lifestyle and spending shifts open up new avenues for the insurance market. New innovations in the way we travel – such as Uber and AirBnB – highlight insurance considerations that a wider public need not have previously considered.
For instance, Uber have been resistant to calling themselves a private hire company, but their drivers still require some form of public-liability insurance, if they are carrying passengers. As more businesses adopt this car-share style policy, or other communal service start-ups, will these types of liability cover take on wider prevalence.
Similarly, those opening up rooms to travellers via the AirBnB platform are likely to find that traditional cover may need supplementing with some form of insurance to protect their host status.
It’s hard to envisage a larger threat to businesses all over the world in 2017 than that posed by cyber-threats. We all know and read about the cyber-threat; everything from Tesco Bank, to Yahoo and even (allegedly) the US Presidential election has seen some kind of nefarious activity.
And yet, among UK SMEs, it’s a threat that seems to have as yet gone largely unheeded, with upwards of 75% of small and mid-sized business owners admitting they have no cover for attack, hack or IT failure.
Well, one assume this will have to change. Internet breaches can cost a business in excess of £100,000 (and that’s being conservative), enough to land a crippling blow to many an organisation.
Add on the reputational and trust impacts that follow on from a decisive attack, and this is a risk that business owners and the insurance industry cannot ignore.
Certain political figures may be turning their nose up at talk of climate change, or other environmental impacts; but event of recent years suggest the likelihood of increased demand for specialist cover against climate and weather related incident.
The floods of recent years have had a devastating impact on great swathes of England, Scotland and Wales; with many unfortunate homeowners hit multiple times.
FloodRe, the not-for-profit scheme to assist those vulnerable and previously hit by flooding, was endorsed by the industry in 2016, and one can only envisage further development of ethically-driven initiatives to help those effected most by inclement changes to our climate, in the years to come.
New Niches Offer Opportunity
Traditional insurance markets, selling traditional products, are crowded, competitive places; dominated by the biggest names in the game.
Niche markets fill the gaps; providing solutions to those areas that emerge from changing habits, emerging risks, or evolving environments.
Of course, there have always been those specialised policies within the wider market. But as society changes, so influenced by social media and technology, so there emerges new challenges, new risks and new opportunities. From the way we protect our twenty-first century lifestyles in the physcial world, the way we protect our identity, integrity and businesses in the digital.