The defining insurance trends of 2023 (Hannah Fitzsimons)

To say that 2022 was a busy year for the insurance and brokers industries would be an understatement. Market turbulence, inflation and the ongoing effects of COVID-19 continued to disrupt operations.

As a direct result, we saw large shifts in the popularity of insurance, how it was sold and packaged, and ever evolving customer expectations. With digital technologies continuing to mature, even large insurers – which have historically been slow to adapt – have tapped into growing capabilities to drive both operational efficiency and transformation.

With the recession and deepening cost-of-living crisis likely to drive further changes as both customers and insurers look to reduce spending, adaptability and flexibility will be key to resilience. So, what’s in store for the insurance sector in 2023?

1. Low premium income growth

Insurers are under ever-increasing pressure from customers to reduce the price of their premiums, so they remain affordable, despite the rising operational costs resulting from high inflation. However, with the cost-of-living crisis resulting in both consumers and businesses pulling back the purse strings, being able to afford insurance will become more difficult for many and raising premiums could result in pricing out some existing customers.

Throughout the year, rising mortgage and interest rates, coupled with a weakening economic picture, will reduce demand for house and car sales, having a knock-on impact on insurance. As a result, whereas in 2022, non-life premium income was forecasted to grow
4.1%
, in 2023, it is expected to slow significantly to 1.5%.

2. Technological transformation

Continued competition across the insurance industry last year spurred innovation, in particular driving migrations to the cloud, the simplification of legacy systems, and the integration of emerging technologies and capabilities.

In turn, technological development has propelled competition from a number of new insurance start-ups and industries, many of which are harnessing big data and artificial intelligence to make inroads into the insurance sector. In tandem, established insurers are reaping the benefits that implementing advanced systems and tech solutions can offer them.

Increasing efficiency and productivity, as well as consolidation, will be key to success in 2023, and insurers are looking to technology to help them do so. Building in technology that is flexible, scalable, and resilient is the answer to maximizing profitability and configuring systems that scale as needed.

In addition, incorporating emerging AI and automation tools to aid claims processing and algorithmic underwriting will prove effective, freeing up valuable time to focus on customer retention during a tumultuous year. Recent research from

Deloitte
suggests that the future of the industry is reliant on fully realizing the value and benefits of infrastructure and technological upgrades. Proactively anticipating and fulfilling distributor and policyholder expectations and prioritising greater levels of experimentation is the key to driving ongoing innovation, competitive differentiation, and profitable growth.

3. Harnessing digital to support the customer experience

In 2023, as retaining and attracting customers becomes more difficult, customer-centricity will become key. A recent

PwC
study found that a third of consumers will walk away from a trusted brand after a single poor experience, precipitating a shift from a policy-centric business model to a customer-centric one. Customers are also more likely to engage with their insurer during times of need – such as the cost-of-living-crisis – and businesses therefore need to ensure that they are providing points of contact and regular updates to remain front and centre.

With the rise of digital, customer expectations have also evolved to expect more personalised, technologically advanced, and easy to use services. They no longer want to be confined to a single platform. From websites to apps to live conversations, they want the choice of a channel that best fits their needs and provides a simple, seamless experience. A multifaceted, multichannel approach improves the customer experience by streamlining processes as well as providing personalised and omnichannel experiences.

The push for cross-selling in 2023 will likely go hand in hand with a drive for personalised insurance packages and tailored premiums that ensure that customers can get exactly what they want and only what they want, reducing their own expenditure. This is becoming increasingly achievable for insurers to provide, due to being able to leverage the immense power of big data.

The global economic headwinds may be blowing strong, but in the face of ongoing challenges, I have no doubt that by demonstrating flexibility, adaptability and customer-centricity, the industry will only emerge stronger.

Source: https://www.finextra.com/blogposting/23654/the-defining-insurance-trends-of-2023?utm_medium=rssfinextra&utm_source=finextrablogs

Source: https://webfulnet.com/

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