To say that the insurance industry has experienced a turbulent past few years would be an understatement. What should agents and insurance companies expect in the new year? The following are three key trends that industry experts believe will be influential in shaping the insurance industry in 2023.
The industry must be prepared for an increase in highly complex and interconnected risks
If COVID-19 taught the insurance industry anything, it’s that it must be prepared for uncertainties waiting around the corner and must have the people, processes and products in place to pivot when needed. Sure, the brunt of the pandemic may be behind us, but who’s to say what global health crisis or weather-related disaster might be next? In addition, these complex risks are often interconnected in many ways, further compounding the situation.
For example, in the throes of the pandemic, businesses were significantly impacted by supply chain and labor shortages, as well as having to address health and safety concerns to help mitigate risks that would keep patrons and employees safe. Later, these businesses turned to their insurers for answers concerning workers’ comp and business interruption issues.
Insurers wanting to expand their digital capabilities must prioritize technologies that provide a more personalized, human touch
According to a study by PWC, 70% of consumers surveyed identified helpful and friendly services from their insurance company or agent as a critical customer service factor. The report goes on to note that 1 in 3 consumers said they would leave a trusted company after a single poor experience. The fact is, while consumers clearly enjoy the convenience of so many insurtech capabilities, they aren’t willing to stick around or pay for additional services if their expectations of excellent customer service aren’t being met.
This year, we’ll likely see more insurance companies shifting from a policy-centric business model to a customer-centric one, with digital platforms that make it easier for agents to build stronger and more personalized customer relationships. “[Insurance companies that] get it right [are those that] prioritize technologies that foster or provide these benefits over adopting technology for the sake of being cutting edge.” Source: PWC
Coverage for cybersecurity new business and renewals will face significant rate increases
The increase in ransomware losses in 2022 has caused cyber insurance premiums to skyrocket this year. According to Risk Management Magazine, cybersecurity coverage has been vastly underpriced for several years, and, as such, insurance agents should expect significant rate increases in 2023 upward of 25% to 100% or more. They should also expect stricter underwriting requirements.
“Cyber insurance is volatile and the number of new players entering the market makes it difficult to provide a general idea of what insurance buyers might expect on renewal.” Source: Risk Management Magazine
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