2022 Insurance Industry Outlook

Luke Fitzpatrick

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A person working remotely.Photo by Brooke Cagle on Unsplash

After the tumultuous economic times brought about by the pandemic, the insurance sector, like all others, is in recovery and adaptation mode.

Consumer expectations aren't what they once were, and providers must move with the times. As we settle into 2022, insurance companies must focus on adapting to the long-term changes caused by COVID-19. In addition, they must keep their eye on the ball when it comes to modernizing their operations in keeping with the future of digital commerce.

The impact of the pandemic on the insurance industry

At the time of the pandemic first emerging, the insurance sector was already in considerable transformation, with new digital technologies becoming so prevalent in the industry.

Shifts in customer needs and expectations, remote working trends, and the global climate crisis took their toll on the sector, making the disruptions of the pandemic even trickier to navigate.

Restoring consumer faith

2020/21 was a difficult time for the market, with harsh conditions that inevitably led to survival reactions from many insurers. Consequently, the rate of claim rejections increased, as did premium amounts.

Moving into 2022, as economic uncertainty lessens, insurance companies will need to work hard at restoring consumer faith in their products. Companies must do what they can to minimize customer losses resulting from increased premiums in such competitive times.

Additionally, developing superior customer service practices and simplifying their claims processes will go a long way to retaining more customers. Finally, a refocus on brand awareness and earning customer trust, and loyalty will be a high priority for many insurers this year.

With so much real estate activity, changing trends in remote working, and the acceleration of digitized business practices, customer expectations have shifted enormously. As a result, insurers will need to prioritize their delivery of seamless, customer-centric services and products to remain competitive moving forwards.

Remote working is the new normal

The remote-working trend was brought about by necessity in response to the pandemic. Still, as its necessity decreases, the trend remains, with many holding fast to the many benefits it offers.

Like many others, the insurance industry had to adapt to remote working during Covid, allowing employees to work from home. However, while remote working provides greater flexibility for working parents and others in circumstances that are hard to juggle, it also results in a fragmented workforce.

Transitioning to remote working presents challenges to companies as they strive to maintain cohesion in staff communication, team dynamics, and collaboration. Insurers must ensure the continuity of effective team management, employee engagement, staff morale, and productivity.

As COVID-19 cases drop and vaccination rates reach a critical point of protection, the new normal in physical workspaces is expected to be significantly different. Like many other businesses, insurance companies will need to adapt their workspaces to accommodate remote and hybrid working, allowing staff to retain more flexibility.

Sustainability and climate change issues prioritized

All industries are facing mounting pressure to lead the way in prioritizing combating environmental and climate issues, and the insurance sector is no exception. In 2022, the implications of environmental, social, and governance (ESG) issues upon the insurance sector will magnify.

Laura Adams from The Truth About Insurance says, “When underwriting and assessing risk, more and more insurers will start considering ESG factors, as global issues regarding climate change continue to evolve and increase.”

This year and beyond, it will be in insurers' best interests to take a keen interest in managing ESG issues and supporting their clients to do the same regarding the commercial sector in particular.

AI and automation

In such a data-driven sector, it stands to reason that the insurance sector will be at the forefront of transitioning into automated sales and marketing strategies for optimal reach.

Using Artificial Intelligence (AI) and automation, the industry can rely on more personalized campaign designs to best reach target consumers. These technologies allow many industries to achieve higher conversion rates than traditional generic advertising, and the insurance sector is no exception.

Many insurers have already adopted AI and automation to improve their underwriting and claims processes, and the next step is to utilize these technologies to improve their marketing reach.

In addition, moving towards automation and AI technologies can allow insurance providers to optimize their operations and recover from the losses associated with the pandemic conditions.

Automated insurance workflows significantly reduce paperwork and can drastically improve the speed of claims processing, freeing up resources to tweak other areas that can fuel growth and increase revenue.

Increasing the diversity of products on offer

In such changing times, consumer needs are shifting like never before. However, convenience is also at the top of their list of desires, increasing the pressure on insurers to deliver more comprehensive product ranges to cater to the trends.

Insurance providers can put these smart technologies to work to uncover gaps in the market and bolster customer retention by using the insights gleaned to give consumers what they want. For example, an increasing number of car insurance policies are being impacted by the advancements in telematics, which is simultaneously helping encourage better driving behaviors and creating more usage-based insurance options at the consumer's convenience.

With more convenience at our fingertips than ever before, markets are saturated with options, and consumers' brand loyalty is no longer a common priority. If the customer experience, service, product range, and quality are evident, then why shop elsewhere?

Digital transformation will continue to dominate 2022

Ultimately, regardless of anything else, one inescapable fact is that today's consumers expect seamless, convenient digital experiences and will click elsewhere if they don't receive them. Millennials are fast becoming the critical generation to please, along with their younger, even more, tech-savvy counterparts.

The InsurTech (insurance technology) sector is booming, with a reported $7.1bn invested in InsurTech companies worldwide in H1 2021. The future of insurance companies is heightened transparency, a focus on sustainability, highly digitized processes, and seamless customer experiences.

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Academic Speaker | Freelance Journalist | I have contributed to a variety of publications such as Forbes, Tech In Asia, and The Next Web. I cover a variety of topics ranging from fintech, big data, AI, blockchain, to lifestyle and breaking news stories.

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