Use the Past to Improve the Future: 5 Trends That Affected Insurers in 2022

While the supply chain delays initially began in 2020 with the COVID-19 pandemic, just about every business had to deal with them in 2022. 

On one hand, these continued disruptions have contributed to high inflation (as noted above) as well as delivery delays that directly influence insurers’ experiences with their customers–both of which threaten profitability and customer retention. 

Yet on the other hand, supply chain disruptions may also present new opportunities for innovative insurance carriers who can offer specialized insurance to help their customers minimize the risk of supply chain issues. Such new territory can be complicated, especially when it comes to identifying potential risk, but advanced modeling capabilities that use AI and ML can help insurers make the best decisions possible.  

3. Increased Competition 

The entire insurance industry was once perceived as being too big, too complex, and even too cost-prohibitive for new firms looking to enter the market and establish a competitive foothold. Yet today, a growing number of competitors are springing up–ranging from small, aggressive start-ups to larger, more traditional companies with a new offering or approach–and threatening to disrupt the entire market. 

These new market entrants now see new opportunities to use new technologies and innovations to give consumers what they’ve been looking for: faster offers, more competitive pricing, and seamless, personalized experiences. Consumers are already familiar with this type of service and are increasingly demanding it from the companies they do business with. Insurance carriers have to pivot to provide this level of service–or risk losing business to new competitors who can.  

 4. New Technology  

This market trend goes hand-in-hand with the one above. In 2022, many insurers realized that they need to focus on new innovations and capabilities through the use of better-performing and newer technologies. This includes comprehensive solutions that improve internal efficiencies, such as automation and reporting, as well as powerful new pricing software, rating, and underwriting solutions that help insurers accelerate their time to market, intelligently assess risk and win more business. Examples of these technologies include data modeling, advanced analytics, AI and ML workloads, and personalization. 

Many, if not most, insurers realize more modern technology will be their key to their success. This was a theme we heard over and over again in our 2022 Industry Trends Report on modernizing operations in insurance. While most insurers know they need to transform their business, many are still slow to start and may be at risk of falling a step behind.  

Instead, they still rely on too many manual processes, paper-based systems, legacy systems, or disparate technology that simply can’t provide the internal efficiencies and digital experiences consumers crave.  

 5. Extreme Weather Events 

Extreme weather events are becoming much more frequent and more severe. Between 1980 and 2021, the United States suffered from an average of seven to eight natural disasters each year. Looking back,  there were more than 15 severe storms in the first 10 months of 2022.  

These climate incidents are also becoming extremely expensive. The cumulative costs of natural disasters in the last five years have added up to $788 billion. According to research from McKinsey, the total value–the total costs related to weather and natural disasters around the globe– is estimated to double from two percent of the global GDP today to more than four percent of global GDP in 2050.  

One thing is clear: changing weather conditions could disrupt the entire insurance industry and could even potentially put some companies out of business. We’re already seeing the case where insurance carriers are already raising premiums and deductibles, refusing to renew policies, or denying coverage completely in the example of some policies not covering “named storms.” An example of why intelligent underwriting capabilities are of paramount importance. 

It’s an extremely complex, evolving situation but insurance companies can’t afford to underestimate the true threat of extreme weather events. Future insurance solutions will have to evolve beyond traditional risk transfer and reshape existing business models.  

Opportunities Ahead 

In many cases, these trends presented new challenges and wrinkles that insurers had to react to. Yet in some, they also represent new opportunities for innovative insurance carriers looking to take the right step now to plan for more success in 2023. 

Earnix can help any insurance carrier respond to changing marketing conditions to gain a competitive advantage. Our solutions empower new strategies and an evolving ecosystem of technologies to transform business processes–and business results. Learn how Earnix customers are using our insurance rating engine, pricing, modeling and underwriting solutions to seize new market opportunities.