Over the past few years, the insurance industry has proven to be incredibly flexible and adaptable. Carriers have taken advantage of new capabilities and follow new insurance trends to enhance operational efficiency and transformation due to the maturity of digital technology.
The insurance industry has noticed several things that have stood out in 2022, including higher premiums in both personal and business lines of business. I faced difficulties due to crises and natural disasters. She also noted the difficulty of newcomers to the market in “reimagining” insurance when rubber meets the road. And in this blog, we talk about how insurance trends will shape the insurance industry in 2023.
Expert opinion on insurance trends
Research by Swiss Re shows that the cost of claims will be the biggest hurdle for the insurance sector in 2023. A survey by Allianz Life Insurance Company in North America revealed that 66% of Americans now believe a recession is coming, up from 48% a year earlier. Both studies indicate Big challenges For insurance-related business and the general insurance market in the United States
The global insurance sector will experience seismic change in 2023 as technology and financial markets continue to advance but remain unstable. According to research by EIS, a global provider of basic technology for insurance businesses, many variables that are changing the market will affect established and emerging insurance companies.
As stated by Rory Yates, Senior Vice President, Corporate Strategy, Global at EIS, the coming year will see the growth of digital transformation. He also predicts that only ambitious insurance companies that will continue to prioritize digital transformation in 2023 can withstand the industry’s many challenges. Innovation and growth will continue to be driven by sustainability, fairness and transparency. By enabling employee-centric transformation, automation will free HR to focus on the customer.
Now, although 2023 is ahead with challenges for the insurance industry, here are some trends you might want to see to protect your insurance business going forward.
10 expected trends for 2023 that insurance companies should consider
1. Consumers will increasingly expect flexibility from insurance providers.
The authorities are addressing the need for insurers to act more sensibly. As a result, they are asking insurance companies to make their customers more educated, more clear about their coverage, and able to choose their provider with fewer barriers. According to Yates, the move “could lead to a win for customer experience pioneers,” especially for individuals who see this as an opportunity rather than an obligation.
2. ESG will be more prominent for insurance leaders
As the second largest holder of assets behind pension funds, insurance companies are expected to play a major role in the transition to a greener economy. They can influence change through ethical processes and asset management. In addition, they can incentivize other companies and individuals by taking into account environmental, social and government (ESG) aspects when underwriting.
The insurance sector will focus its investment efforts on the battle to reduce carbon emissions and achieve net zero targets. An expansion of data-driven sustainability and exposure to risk will contribute to this. With the advent of ESG, interested parties can form new rules to combat “greenwashing,” address the problem, and create a clear path toward a more sustainable industry.
3. Embedded insurance will boost the growth of the industry
The market potential for new products such as consolidated insurance is likely to increase by an estimated $3.7 trillion. These products will help reinvent insurance and its place in people’s lives. The product will also provide new ways to engage customers and mitigate risk.
Expanding the channels through which you can provide insurance to customers is what underwriting insurance is all about. To integrate its products, P&C insurers will intensify its collaboration with other insurers and ecosystem suppliers. They will invest more in marketplaces with API links to increase acceptance of embedded insurance.
4. Tough competition within the insurance ecosystem
“Technology-enabled” insurers are outperforming others thanks to the growth of the digital ecosystem. Adoption of underlying technologies will change, allowing more adaptable competitors to create new business models to beat competitors.
5. Development in the insurance industry
In the insurance industry, underwriting has already gone through the most important change. We can expect this trend to continue into 2023 and beyond. New technologies are driving fully automated or data-driven software that streamlines the process. Life insurance providers are unable to offer a fast, self-service agent/customer experience due to lengthy underwriting procedures.
Currently, the underwriting system is taking significant steps to automate the workflow. They are also working to transform the way underwriting is done, for example, by giving access to more data sources to gain new insights into risk analysis while significantly improving agent, broker and customer experiences.
6. Market Disruption by Insurtechs
As more insurance technology enters the market, other incumbents will be under pressure to establish partnerships within the digital ecosystem. Doing so will allow them to provide expansion opportunities for innovative newcomers while meeting their own technology and innovation challenges.
In the past, carriers relied on a complex heritage structure. Today, the same companies are streamlining and developing cutting-edge new technology stacks to run their businesses. Meanwhile, other advanced IT companies have already started the modernization process. They implement cutting-edge technology capabilities and technologies in their solution portfolios.
7. Insurtech’s data sources will continue to increase in 2023 and beyond
As the Internet of Things expands and more urban areas use more innovative ways to augment existing infrastructure, the capabilities of data sources and risk assessments will continue to be better.
Specifically in the health and life insurance sectors, wearable technologies and incentive programs are likely to drive higher health and lower premiums. Moreover, they will continue to simplify as real-time data increases the cost of coverage and provides clearer insights.
8. Widespread internal technology distribution
Rory Yates further predicted that under-equipped insurers will either lose market share or adopt costly point-of-access solutions in 2023. Then they will resume managing new channels as the insurance technology sector and continue its maturation cycle. As a result, the industry will grow significantly as fewer technological competitors drop out of the race or adopt new business strategies.
The proliferation of new technologies, including artificial intelligence, cloud computing, and analytics – and the influx of new data from the Internet of Things, third-party databases, social media, and other sources, is gradually increasing. Therefore, insurance companies now have a range of strategic choices for the products they offer, their distribution networks, and even their overall operating models. Here, the ability to invest at multiple speeds, and enhance core distribution while developing new models and approaches, has become an imperative for insurance management teams.
9. Automation of insurance processes must continue
Automation technologies (RPA, ML, Low/no code), analytics technologies (AI and predictive analytics), and connected insurance (IoT, usage-based) will lead to increasingly targeted insurance products and better services. Automation will increase customer loyalty as it evolves through 2023 and reaches its peak in 2024.
Currently, insurance companies are positioning themselves to respond to a changing business landscape as AI becomes more integrated into the industry. For example, insurance companies are taking advantage of the technology transformation driven by insurers to build a business model that uses artificial intelligence at its core.
Data processing capabilities, new data channels, and improvements in AI algorithms will advance AI and Robotic Process Automation (RPA) in insurance. Leveraging efficiencies generated by RPA, AI, analytics, big data, and low-code or no-code technologies can help streamline operations, deliver exceptional customer experiences, and enhance data security.
In 2023, AI and RPA technology will have a massive impact on all elements of the insurance industry, including underwriting distribution and claims pricing. The massive adoption and integration of automation, deep learning and artificial intelligence will drive the development of the industry. Players who will use modern technologies, create innovative products and streamline operations through artificial intelligence will be able to thrive.
10. Insurance companies will not actually affect economic stability
Despite the cost of living crisis, insurance will remain an essential product. While consumers may cut back on other expense areas, home, car, and health insurance, among others, will remain crucial and a steady source of income for investors, as noted in Deloitte’s survey report.
Conclusion
General forecasts of insurance trends show that the insurance industry is under pressure to keep up with the pace of change in this rapidly evolving market. New entrants to the market are introducing new products and services much faster than existing insurers. Therefore, incumbents need to move faster to stay relevant. They must be able to quickly develop and launch new products, enter new markets, and expand rapidly.
Therefore, digital transformation is no longer an option for insurance companies; it is necessary. In order to compete in this new world, insurance companies need to embrace digital technologies and use them to their advantage.