It’s starting to feel like a New Year’s tradition. But we’re not talking about the ball drop or kissing your beau at midnight. For the past several years (if not more), insurance industry research firms and publications have rung in the new year with predictions about the industry’s continued evolution and transformation.
Well, Happy New Year from AgentSync – because we’re here to report that insurance in 2022 is looking to undergo even more change than last year. The trends aren’t necessarily new: It’s the continuation of everything that’s been building over the past decade. With investment in insurtech reaching new highs in 2021, there are more resources than ever before to keep these trends moving forward.
What happened in insurance in 2021?
Before we look forward, let’s give a quick recap of 2021.
- The COVID-19 pandemic resulted in supply chain issues across a large number of industries, impacting many businesses’ ability to function on a basic level. Those businesses’ demand for insurance dropped, but claims for damaged and delayed goods skyrocketed.
- Work-from-home became the new normal for many companies and their employees, resulting in brand new cyber-security risks from hundreds of thousands of new home offices.
- Speaking of cyber-security, ransomware and phishing attacks targeted businesses of all sizes, across all industries.
- Technology became an even more integral part of our lives as new tools emerged to help teams work and collaborate from afar.
While these trends aren’t specific to the insurance industry, each one of them touched it and transformed it during 2021. Insurance agencies, brokerages, carriers, MGAs, and MGUs were not exempt from any facet of the changes happening across life and business for companies in the U.S. and beyond. On the contrary, insurance industry businesses were perhaps more impacted than others due to being further behind the times at the start of the pandemic.
Five predictions for 2022
It will shock no one that the continued digital transformation of the insurance industry (if not the entire world) is at the heart of what to look out for in the coming year. But the specifics of where these changes will happen may be surprising.
1. Back-end operations improvement will be the next big jump in efficiency
While not as exciting as the customer-facing tech gadgets, insurtech that helps the industry run more efficiently is set to play a major role in 2022. From the automation of claims processing to technology that simplifies the producer licensing and compliance process, insurance carriers and agencies should find ways to reduce costs and improve customer service through innovative tech solutions this year.
2. Consumers will have more options than ever when it comes to where and how to buy their insurance
The Amazonification of insurance continues as digital-only insurance companies bring more freedom and choice to consumers. Trends like usage-based insurance (UBI) and insurance products that are only available to purchase digitally will continue to blur the lines between insurance and technology. Soon, “insurtech” will be synonymous with “insurance” just like “e-commerce” is no longer a separate entity from “commerce.”
3. The same old “new risks” will keep driving changes in insurance
Such “new risks” as global pandemics, massive cyber-attacks, and climate-change-induced mega natural disasters can feel like old news at this point. The truth is, they’re still relatively new in insurance terms. For an industry as old as insurance, the dramatic changes we’ve all witnessed over the past three-to-five years are ones the industry is still reckoning with how to address.
In 2022, insurance companies will have to find ways to offer products their consumers want and need, while still remaining profitable and solvent enough to be there when claims occur. The impacts of these “new risks” is something the industry has been grappling with for a while already, and that won’t change in 2022.
4. A changing idea of “global markets”
The digitization of insurance has progressed hand-in-hand with its globalization. But after 2020 and now 2021, the idea of global insurance markets may take a different direction.
An S&P report titled The Big Picture: 2022 Insurance Industry Outlook explains that recent events – from Brexit to COVID-19 – may change the trajectory of the insurance and insurtech industries’ globalization. Citing events like Brexit, and the wide discrepancies between how some countries are dealing with COVID versus others, experts say the trajectory of global insurance markets may look different than before.
One thing that’s not expected to change is the demand for basic insurance products like life insurance in developing regions where there is very low market penetration currently. This means opportunities for growth are still very strong on a global level.
5. The changing definition of insurance companies
As recently as a couple of years ago, we wouldn’t have thought of Toyota, Tesla, or Amazon as “insurance companies.” Yet today, these companies (and more soon to come) are providing insurance policies on their own products and services, often embedded into the purchase of the product itself.
In addition to traditional insurance companies adopting new technology, we’re seeing – and expect to continue to see – technology platforms being built to serve as insurance sales mechanisms to a new generation of consumers who may also have recently become aware of just how underinsured they are, thanks to the pandemic and large-scale natural disasters.
Brace yourself: growth is coming
On top of the five predictions above, there’s also buzz and general agreement that 2022 will be a strong comeback year for insurers. With vaccines available to those who want them, and COVID restrictions starting to relax around the world, businesses are getting somewhat back to normal operations and will once again need to purchase insurance to ensure their continued protection.
The pandemic also reminded people of their mortality, which has accelerated the purchase of life insurance policies. With the Omicron variant of COVID-19 emerging just before the 2021 holiday travel season, travel insurance policy sales have spiked. Overall, a third of insurers say they expect 2022 to be significantly better than 2020 and 2021. They expect to see a rise in both number of policies and total and premium.
If your insurance company, agency, or MGA/MGU is one of the many expecting to bounce back from the pandemic and grow in a big way in 2022, AgentSync can help reduce costs by automating and simplifying producer onboarding, licensing, compliance, and more.