The insurance industry has shown its ability to withstand challenges and change with the times in recent years. By using advanced digital technologies, insurance companies have been able to improve their efficiency and undergo positive changes.
Overall, the past year has had its ups and downs. While there were increases in premiums in both personal and commercial insurance and challenges such as crises and natural disasters, new companies entering the market struggled to effectively innovate in the industry.
From a “glass half full” viewpoint, we did see that ongoing competition encourages innovation. We observed a growing interest in cloud transformation (despite some delays). The emergence of modern ecosystems was also observed. In the middle of all these changes, carriers also grasped the importance of a diversified talent pool and gave hiring, development, and retention top priority.
We foresee three trends that will probably influence the insurance sector in 2023 and beyond, given the industry’s continuous struggles with issues like inflation, rising interest rates, climate change, and a skills shortage.
1. Emerging and Evolving Risks
Insurance companies find it challenging to navigate the risk landscape due to uncertainties sparked by international problems, governmental rules, and economic forces.
Additionally, these types of risks tend to be intricate and interrelated. For instance, extreme weather and natural disasters can create vulnerabilities for businesses and make the workplace hazardous and properties uninhabitable.
Another growing risk is cybersecurity, with a rise in the frequency and intensity of ransomware attacks. Cybersecurity is no longer just a matter of technology but a business risk as well. To address these interconnected threats, insurance companies must be quick to respond and adapt. This means being flexible and proactive in using tools like artificial intelligence, machine learning, and automation to prevent and mitigate risks. In the coming year, data management systems and decision-making tools will likely play a central role in helping insurance companies operate efficiently and effectively.
2. Tech Integration to Normal Life
Insurance companies are focusing on reducing costs and promoting long-term growth as they look ahead to the new year. Some companies are modernizing their technology systems, either by streamlining their legacy systems or adopting new technologies. Others are using insurtech solutions to enhance their offerings.
Ultimately, insurance companies are working to build flexible, scalable, and resilient technology systems that can support growth and add value. This may involve automating certain parts of the claims process, using data from third parties to better assess risk, or implementing digital customer service tools to improve satisfaction. By starting with a strong foundation, insurance companies can take advantage of these opportunities and continue to shape the industry in the coming year.
3. A More Human Experience for Clients
During difficult times, it’s important for insurance companies to remember the emotional impact their actions have on their clients. Customers often want more communication with their insurers, especially when they are in need.
Engaging with agents and providing high-touch support can make customers feel heard and kept informed. Customers also appreciate being able to choose the communication channel that best fits their needs, whether it’s a website, smartphone app, or live conversation.
A poor customer experience can cause people to switch to a different brand, so it’s important for insurance companies to prioritize the customer experience and shift from a policy-focused business model to one that is customer-centric. Companies that do this well will likely find success in the long term. Providing personalized and omnichannel experiences can improve the customer experience and streamline processes.