The way consumers shop for insurance has undergone significant changes in the past two decades. The rise of digital channels, such as direct and embedded platforms, and the availability of data for personalized pricing have given consumers more control and influence. These changes are driven by the increasing capture and use of data, as well as advancements in technology that allow for the connection of this data to insurance products. This evolving landscape will continue to shape the way consumers shop for insurance, whether they choose to work with agents or directly with carriers, OEMs, or other service providers.

Looking ahead, we envision a future where consumers can aggregate and own their data as a personal risk “wallet.” This wallet will allow them to compile not only the data traditionally used for underwriting, but also additional data that carriers may not have had access to before. By utilizing this more comprehensive data profile, insureds can take their wallet to different carriers to obtain the best price and coverage, considering the trade-off of sharing more data for greater access to personalized offerings. Furthermore, we anticipate a future where carriers receive instant updates on an insured’s exposures, enabling more accurate pricing and the ability to adjust coverage in real-time based on triggers such as vehicle sales, property replacements, or healthy behaviors.

Examples in the market today demonstrate the concept of the mirrored consumer coming to life. One instance is the State of California’s proof of concept where vehicle titles were stored on a private blockchain. This technology allows individuals to store their vehicle titles in their digital wallets, triggering changes in their auto policies accordingly. Another example is State Farm’s equity investment in ADT, which helps the insurer predict and prevent losses by partnering with a company that provides home security systems. These partnerships enable insurers to gain insights into consumer behaviors and their impact on risk.

To prepare for the future of the mirrored consumer, we recommend several actions for carriers to consider in the near- and medium-term:

1. Target market: Define the target consumer more precisely and identify the data needed for underwriting. More data allows for deeper segmentation, favoring specialists who can provide personalized experiences and coverages.

2. Distribution and purchase experience: Explore ways to get closer to life events that trigger coverage changes or new coverage needs. Leverage partnerships to access consumer data and insights, and make the data exchange between carriers, agencies, and consumers more seamless and efficient.

3. Product, pricing, and underwriting: Utilize Generative AI and Large Language Models to gather information from consumers and structure unstructured data. This will enable carriers to offer tailored products at customized prices. Develop a strategy for utilizing first, second, and third-party data, including unstructured data, while balancing pricing accuracy and cost. Ensure that the tech stack, including rating and pricing engines and policy admin systems, can handle real-time requests.

Moving on to the concept of curators, these digital personal shoppers are advanced AI intermediaries that require minimal human interaction. They can work on behalf of both consumers and companies to improve the buying and selling experience. In the insurance context, curators can enhance the role of agents and brokers by automating tasks and leveraging consumer data to find the best coverage and price. They can continuously search for the best match based on up-to-date data, reducing the effort consumers need to devote to insurance shopping. Additionally, curators can negotiate with carriers to secure better prices for comparable coverage by highlighting elements of a consumer’s risk wallet.

As the use of curators becomes more common, we recommend the following actions for carriers:

1. Target market: Identify the consumers who are most likely to value a curated experience and be willing to share data for up-to-date coverage and optimal pricing.

2. Distribution and purchase experience: Design the desired consumer experience for each product and coverage, determining triggers, detection methods, and the level of autonomy versus consumer involvement. Consider the role and value of carrier field staff as curators become more prevalent.

3. Product, pricing, and underwriting: Develop operational and technical capabilities to accommodate a world where curators are constantly shopping consumers’ risk. Identify the data and signals that would initiate coverage changes. Explore episodic/periodic coverages to adapt to changing consumer needs. Brainstorm ways to increase consumer loyalty through cross-selling, value-added services, and efficient claims services, as increased shopping frequency may reduce loyalty.

In summary, the evolution of the insurance industry is driven by the changing behavior of consumers. The mirrored consumer, with their personal risk “wallet,” and the role of curators as digital personal shoppers are shaping the future of insurance shopping. Carriers that adapt to these trends by leveraging data, technology, and partnerships will be better positioned to meet consumers’ evolving needs and preferences.