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Caught mid-transformation, the Covid-19 pandemic has had an enormous impact on the global insurance industry. Throughout 2022, we expect to see insurers reacting to the long-term effects of the pandemic while continuing to advance further into the future of digital insurance.
Changing consumer expectations, the global climate crisis, and remote working will all contribute to the landscape of insurance over the coming year. Let's take a look at some of our predictions of the most interesting trends coming to the insurance industry in 2022.
Insurers work to restore customer faith in insurance post-pandemic
Just as we predicted last year, 2021 has been a tough year for insurers, characterised by hard market conditions that have led to higher premiums and higher claims rejection rates for customers.
In 2022, insurers will have to make efforts to restore customers' faith in the industry, as well as minimising customer losses in the wake of premium rises. Insurers will no doubt focus on improving the customer experience by increasing transparency and simplifying the claims process in order to boost retention rates and strengthen consumer brand loyalty.
As customer expectations change, insurers will have to adapt their business model to meet new demands. Insurers focusing on delivering customer-centric products and services will fare well in 2022.
The insurance industry will take a firmer stance on climate and sustainability with ESG
The insurance industry plays a vital role in the promotion of sustainable development both socially and economically. All industries are facing growing pressures to put climate and environmental issues at the forefront of their business dealings, and the insurance sector is no different. Already this year, Aviva has set itself a target of net-zero carbon emissions by 2040.
Environmental, social and governance (ESG) issues will have wide-ranging implications for insurers in 2022 and beyond. A growing number of providers will consider ESG risk factors when undertaking risk assessments and underwriting, and industry standards across multiple ESG issues including human rights and climate change are evolving every year.
Over the following months, insurers will no doubt take a more active approach towards managing ESG issues, and the insurer's role is expanding to include supporting clients in managing ESG issues within the framework of commercial insurance.
Remote working means greater workforce support is needed
It's already clear that the pandemic has hastened the trend towards remote working, and the insurance industry is no different in allowing many of its employees to work from home for at least part of the week.
The obvious benefits of remote working include more flexibility for staff, which in turn leads to boosted staff morale and greater accessibility for working parents and other staff with complex personal circumstances.
However, remote working is also leading to a fragmented workforce, with the strains of remote working taking their toll on workforce collaboration and dynamics. Partially this divide is caused by distance, and partially by fragmented staff structures which subject one set of staff members to a different ruleset than another.
The solution to this will involve insurers taking steps to introduce effective employee engagement strategies to keep staff invested in their company, and many brokers will no doubt be expecting insurers to return to the office on at least a part-time basis as the pandemic winds down in the UK.
Marketing and sales will be automated to deliver personalised ad campaigns
Following on from the trend we predicted in 2021 for data-driven insurance, marketing and sales will be the next elements of insurance to be automated. Data-driven marketing strategies can help insurers to offer more personalised ads that are both more useful to customers and return a higher success rate when compared to traditional, wide net advertising.
Data-driven marketing reaches the right people, offers a better ROI, and means that tweaking and improving marketing campaigns year on year is simpler than ever before. After embracing AI and automation in the claims process and underwriting, insurers will be keen to see where else this newfound technology can be applied in 2022.
Insurers will embrace the benefits of a diverse product offering
Another way in which data-driven marketing is improving insurance is it's showing insurers where the gaps in the market lie; by paying attention to which products customers want more of, insurers can spend more time innovating new products and, crucially, marketing those products to the right audience.
While customers in 2022 will not be driven by brand loyalty, they will still be motivated by their own convenience. Shopping around for different products from multiple different insurers will not be the norm, and insurers can make the most of this by positioning targeted advertising for new offerings to those consumers already interested in similar products.
By offering a diversified range of products, brokers will soon see that they can secure more custom from existing policyholders with little extra effort.
The ongoing digital transformation continues
The insurance industry is undergoing a digital transformation that will no doubt be ongoing for some years. The insurtech industry is growing every year, with statistics from McKinsey showing that insurtech funding has increased year-on-year consistently since 2017, reaching an estimated high of €8.7 billion in 2021.
Anyone who has attended a UK-based insurance conference in recent years will know just how important insurtech is in the industry today. Throughout 2022, the proliferation of digitised insurance services, including automation and AI, will spread wider throughout the industry as more brokers gain confidence with this new technology.
Keep up with the latest trends
You can keep on top of the latest trends in insurance by attending one of the UK's many insurance conferences that take place every year. Insurance conferences are a fantastic way to network as well as gaining a unique insight into the future of insurance and financial services.
In 2022, we predict that many of the biggest trends across the insurance industry will be data-driven responses to the impacts of Covid-19.
2022, like 2021, will be a difficult year for many insurers, with some industries still predicting losses a year ahead. Hopefully, many of the changes insurers can make to automate and streamline their workflows in the coming years can mitigate these losses in the wake of the pandemic.