10 things to watch in insurance in 2023
Disruption within the insurance industry has been kicked into high gear over the past couple of years, with new customer demands and emerging technologies putting traditional insurers under pressure. To stay ahead of this fast pace, insurers must assess the factors shaping the industry including new business models, customer expectations and emerging technologies being used by competitors.
As an eventful 2022 draws to a close, here are 10 predictions insurers should be aware of in 2023:
1. Insurers will do well in the high interest rate environment
While consumers will cut back on other expense areas, insurance for home, car and health amongst others is essential and will remain a steady source of income for investors in 2023.
2. Innovation and experimentation
Against the backdrop of less competition from faltering insurtechs, due to funding issues, traditional insurers will step in and advance innovation and experimentation. This will manifest itself around improved customer experiences to catch up with the precedents set by consumer finance organizations.
3. The trifecta hits home
Over the course of 2023 and peaking in 2024, insurers will leverage a combination of automation technologies (RPA, ML, low/no code), analytics technologies (AI, predictive analytics) and connected insurance (IoT, usage-based insurance). This will result in more targeted insurance products and increased customer loyalty.
4. ESG will dominate the board agenda
Net Zero goals, investment focus and the rise of data-driven sustainability with intensifying headwinds in risk exposure will put ESG at the very top of an insurance CEO’s list. There will be complexity to overcome, and the road ahead at this stage is far from clear.
5. New growth through new business models
With an estimated $3 trillion dollar market potential, embedded insurance and other new approaches to customer engagement will help redefine insurance and its role in people’s lives.
6. The continued rise of insurtechs
The compounding issues plaguing insurance incumbents such as underwriting and administration is creating greater and greater motivation for them to adopt true ecosystem models and take advantage of the emerging marketplace of products and solutions.
7. Regulating trust
Increasingly, regulators are tackling the need for insurers to act more fairly, and in doing so they are demanding that in a digital age, customers need to be more informed, clearer on their coverage and be able to make choices with their provider with fewer barriers. This switch can create a “CX pioneers win” paradigm – especially for those that see this as an opportunity rather than an obligation.
8. The ecosystem of insurers
With the outperformance of the more ‘tech-enabled’ insurer, we will see core technology adoption finally shift the goalpost of agility, allowing movers to adapt faster, enter new markets and develop new business models to outpace the competition.
9. The proliferation of distribution
The increase of new ways to distribute products is never-ending, and it will continue to cause underequipped insurers to either lose market share or adapt high-cost point solutions to access and manage new channels.
10. Underwriting transformation
Developing a fully automated or data driven program that accelerates the underwriting approval process will be a big focus of 2023. Slow underwriting programs prevent insurance carriers from having a modern agent/customer experience that is fast and self-service.
With the myriad of challenges facing the sector, digital transformation will remain a key focus for ambitious insurers in 2023. Whether a startup insurtech or an established carrier, the latest trends and developments can help better deliver and meet customer expectations in today’s modern market.
