The future of digital insurance: Trends are turning customers into "proactive consumers"

Key takeaways

• All-in-One ecosystem: Mobile applications offer the same possibilities as web applications and brick-and-mortar stores – clients expect at least the same level of service.
• AI innovations: Artificial intelligence speeds up claims settlement processes, provides telemedicine as a substitute for overworked doctors, and recommends optimal insurance based on travel history.
• Using data for better services: Gamification and personalized benefits increase loyalty, with clients sharing data in exchange for more advantageous services.
• End of bureaucracy: Success depends on full process transparency and simplified, fast new contract signing without the need to visit a branch, supported by biometric login.

Barriers and challenges for users of insurance applications

Despite rapid digitization and the deployment of innovative applications, customer satisfaction is not automatic. Market analysis and feedback reveal persistent barriers and challenges that reduce user satisfaction:

• Transparency of processes: Users tend to get frustrated when they don't know what's happening after reporting damage or requesting a benefit. The app must work transparently: Received -> Checked -> Approved -> Sent to account. Users then request missing information from customer support, which puts an additional burden on them.
• Complicated login: A frequently mentioned problem in user reviews and responses is the complicated login process using a contract number. The market demands simple, fast, and seamless login using biometrics and a PIN code.
• Different applications and inconsistency: Users have negative experiences when they have to use different portals (web client zone vs. mobile application) for different tasks. They expect equivalent tools – what I can do on the web, I must also be able to do in the application.
• Unclear benefits and advantages: If the application includes benefits, they must be easy to find, clearly categorized, and applicable. Complex conditions of use or "hidden catches" lead to negative reviews and churn.

Key InsurTech trends shaping the market

Digital transformation in insurance is an ongoing process that has long since gone beyond the digitization of paper forms. Three major market trends show the direction in which customer expectations are developing and the solutions that innovative insurance companies are currently implementing in foreign markets.

Trend A: All-in-One Ecosystem

Insurance companies no longer want to be just one of many icons on a smartphone. Their goal is to become a digital hub where clients can take care of everything (health, property, life) in one place and where they have access to payments, documents, contract modifications, and coverage information. The apps act as a smart assistant that actively communicates important changes (underpayment, damage status) and offers quick actions for immediate resolution of situations (calling for assistance).

However, it is common abroad to strategically expand the insurance ecosystem with services that add value for the user¹. This strategy is a response to demand: 73% of policyholders are interested in complete health and wellness packages (including counseling, prevention, and doctor's appointments)².

Trend B: Using artificial intelligence (AI) for a more efficient and valuable digital experience

Global investment in insurance technology (InsurTech) grew by 40% quarter-on-quarter in the second quarter of 2024, with financing for companies using artificial intelligence being the main driver of this growth³. The use of AI in insurance dramatically speeds up processes, increases accuracy, and brings innovation not only in health but also in other areas. AI is becoming key to simplifying interactions with insurance companies in a number of situations.

• Telemedicine and AI diagnostics: AI is significantly advancing telemedicine. Virtual initial consultations or symptom checks help clients identify their health status immediately and online, a trend that has been growing since the pandemic. For example, in 2021, 37% of adults in the US used telemedicine during the pandemic⁴.
• Real-time claims settlement: The use of AI in claims settlement shortens the time it takes to process a claim⁵. Advances in GenAI at companies such as Lemonade have led to a 25% improvement in the speed of insurance claim processing⁶.
• Smart insurance offers: AI can dynamically tailor offers, such as travel insurance, based on past travel data and planned trips, leading to more accurate coverage and simplified purchasing⁷. Another example of AI use is AI chatbots and virtual assistants, which provide 24/7 communication and automate sales processes. In one case, the implementation of such a 24/7 chatbot led to an 11% increase in interest in purchasing insurance⁵. 

Trend C: Prevention and rewards for responsible lifestyles

The future of healthcare and insurance is moving towards prevention and health promotion. Models predict that by 2040, 51% of healthcare funding will be directed towards health promotion and prevention (compared to 17% in 2019), which could save almost €595 billion in European healthcare costs by 2040⁸. Therefore, instead of dealing with the consequences (illness, accident), insurance companies are focusing on prevention.

Motivation through gamification and wearables: Gamification is a key tool for increasing retention and loyalty in this area. Clients are rewarded (benefits, discounts, financial rewards) for healthy habits. For example, Oscar Health found that 87% of members who tracked their steps through the app also actively used support services and online counseling⁹. In this way, the reward system helps change the perception of the insurance company from a "billing interface" to an “entry point into the entire healthcare system.”

Customer profiles and their expectations in digital insurance

The success of digital solutions depends on a precise understanding of what each segment expects from a mobile application.

Gen Z & Millennials (18–34 years old): „Mobile First Generation”

This group demands that their needs be met "here and now" and rejects bureaucracy. They are open to fully digital onboarding and expect the same level of digital services as provided by the banking sector, for example.

This segment has learned that access to services is immediate and secured by biometrics (FaceID), which is a new standard for them. They demand real-time interaction and a process of purchasing insurance with just a few clicks.

Parents/Families segment (25–45 years old)

This category focuses on managing the health and safety of the family (children, partners) and securing assets (mortgages). Time is their most valuable resource. The priority is clear management of family accounts (children's health, overview of prevention) and quick resolution of insurance claims.

Digital tools that allow them to manage the health records of the entire family are becoming increasingly important for this persona. The need to manage family finances and health makes specialized applications a growing segment.

Productive generation (35–54 years old)

This is the most affluent and busiest segment. They expect the app to be clear, transparent, and save them time on bureaucracy. The digital claims settlement process is key for them – they want to track the status of their claim online.

Dissatisfaction is generated by a lack of transparency and lengthy processing. They demand a high-quality experience because they are accustomed to digital services in other sectors.

Seniors (65+)

Although this generation still often prefers personal contact, their involvement in the digital world is gradually growing. They use apps selectively, but with a clear practical goal – checking e-prescriptions and prevention appointments, which saves them a trip to the doctor.

This group has pragmatic requirements, mainly related to healthcare. Market developments show us that digital adoption is constantly growing in this group.

Conclusion

The future of mobile insurance will be marked by competition over who can provide customers with a better digital experience.

The winners in the market will be apps that offer a high degree of self-service, proactive assistance, and prevention through the use of AI and gamification, while also being built on a high-quality customer experience and a fair product offering. Conversely, those who fail to offer attractive insurance, low levels of digitization, and complex processes will be left behind.

However, an app is not a product, but a channel. Even the highest-quality mobile app cannot replace poor-quality products and services (e.g., unfavorable offers, complicated claims settlement, false communication, or slow reimbursement of benefits). Insurance companies must therefore not view the app as a quick win that will replace their products and services, but as a tool for acquiring and retaining their customers.