The P&C insurance industry is entering 2024 with strong momentum. After nearly four years of tough post-COVID conditions, many research firms and analysts predict strong premium growth and easing inflation pressures. Swiss Re estimates premium growth will hit 7.0% in 2024 and total growth rates of 4.5%.
Additionally, the industry net combined ratio is forecasted at 98.5% for both 2024 and 2025, a significant improvement from the 103% in 2023. As a result of these positive trends, the insurance industry should see increased growth and improved profitability in 2024.
With seemingly optimistic conditions ahead, 2024 could be the year insurers get back on track. As they do, we predict they’ll take advantage of the following trends and technology developments:
It’s hard to believe it was just a little over a year ago when OpenAI unveiled ChatGPT. It was truly a jaw-dropping, game-changing innovation. It immediately captured the imagination and attention of the technology and business community.
At this time last year, insurers were just beginning to think about how they could use large language models (LLMs) to improve business operations and achieve better results (and do so more efficiently). The emergence of ChatGPT may have happened so fast that insurers didn’t factor LLMs into strategic planning and budgets for 2023, which is surely going to change in 2024.
According to recent research conducted by Market Strategy Group on behalf of Earnix, more than 70% of insurers reported that they planned on using generative AI tools such as ChatGPT in the next two years. Insurers plan to use AI for such purposes as reducing biases in underwriting algorithms, making more data-driven decisions, increasing customer loyalty, and aligning existing algorithms with business objectives. (For even more insights, you can download our 2023 Industry Trends report.)
2. Increased Adoption of Insurance Technology
The insurance industry has continued to embrace new technological advancements, and this trend is likely to continue in 2024. Insurance technology now includes automation, integrated pricing and rating systems, artificial intelligence, blockchain, and data analytics. These capabilities will play a significant role in improving operational efficiency, risk assessment, decision making, and the customer experience.
For example, as our ability to collect and analyze data becomes more sophisticated, insurers are better able to predict and prepare for new trends or changes in the market. For example, IoT devices now give insurers dynamic pricing capabilities to generate predictive, personalized offers that work for both parties. Additionally, wearable technology is already helping carriers better understand customers’ health and lifestyle habits to better assess risk.
These are just two examples of emerging technology insurers can benefit from. We believe we’ll continue to see even more adoption of innovative new technologies and use cases in 2024.
3. Enhancing the Customer Experience and Engagement
Insurers will also keep investing in specialized technologies to enhance customer engagement and satisfaction and contribute to a more seamless customer experience. This could include the use of chatbots, mobile apps, and other digital platforms to streamline communication, claims processing, and policy management.
Insurance carriers are already making substantial efforts to enhance the customer experience by leveraging technology and refining their service offerings. One notable trend is the integration of advanced digital tools to streamline internal operations and processes and give customers easy access to policy information, claims processing, and communication with customer support.
This digital transformation will continue to simplify interactions, reduce paperwork, and offer a more seamless experience for policyholders, reflecting the broader shift towards a tech-savvy and efficient insurance industry.
Insurers are also highly focused on personalized insurance solutions to meet the unique needs of individual customers. Advanced data analytics and artificial intelligence enable insurers to analyze customer behavior, preferences, and risk profiles more effectively. By tailoring insurance products and services to specific customer segments, insurers can offer more relevant coverage options, competitive pricing, and personalized communications.
This customer-centric approach not only improves satisfaction but also fosters stronger relationships between insurers and policyholders, ultimately leading to increased loyalty and retention in what looks to be a highly competitive insurance market in 2024.
4. Continued Focus on Cyber Insurance
In 2024, insurers are expected to place a significant emphasis on cyber insurance as the digital landscape continues to evolve and businesses face increasing cyber threats. As businesses and individuals face evolving cybersecurity risks, insurers may develop and refine policies to address these challenges.
One major trend is the recognition of the growing importance of comprehensive cyber coverage. Insurers are likely to offer more expansive policies that cover a wide range of cyber risks, including data breaches, ransomware attacks, and other cybercrimes. This shift reflects the understanding that traditional insurance policies may not adequately address the complex and rapidly changing nature of cyber threats.
Additionally, insurers are anticipated to leverage advanced technologies and data analytics to enhance their underwriting processes for cyber insurance. By harnessing the power of artificial intelligence and machine learning, carriers can better assess the cybersecurity posture of potential clients, identify vulnerabilities, and tailor policies to meet specific risk profiles. This data-driven approach enables them to offer more accurate pricing and coverage, ultimately benefiting both insurers and policyholders.
Collaboration and information-sharing among insurers, businesses, and cybersecurity experts are expected to play a crucial role in the cyber insurance landscape. Insurers may establish partnerships with cybersecurity firms to stay updated on emerging threats and best practices. Additionally, industry-wide initiatives for sharing threat intelligence and risk assessments can contribute to a more resilient cybersecurity ecosystem.
The Right Technology to Fuel Business Growth
As these trends continue to develop – and new ones arise – insurers can align their use of the right technology to take complete advantage and stay a step ahead of the competition. To learn more, contact us now.