Insurance has been slow to adapt, but last year, the pace picked up significantly. As the saying goes, “Slowly at first, then very fast”. Insurance is in the fast phase, and 2022 looks like the pace is getting even quicker. So what might we expect for insurance in 2022?
- Insurtech carriers that have previously been the market darlings will struggle with profitability as they come to grips with the laws of insurance. Companies like Lemonade and Hippo lost a lot of value. They will need to adapt quickly, with capital harder to find. They will find that the efficiency of good technology, a great customer journey, and a strong message can ensure the continued capture of market share, but they will need to get their pricing and claims processing right – they need to focus on the basics of insurance. Many of them will shut up shop or get bought - the ones that survive will be leaner, tougher and smarter.
- Insurance companies everywhere will start adopting low-code platforms. This will allow citizen developers (ie., non-developers!) to code their logic into the insurers’ core systems. Gartner predicts that half of all new low-code clients will come from business buyers that are outside the IT organization by 2025. The insurtech enablers providing these platforms will find demand increasing as companies realise the benefits of enabling the 90% of staff who know the business to scale their insights via low-code systems. Internal IT resource bottlenecks will drive increased adoption across the business.
- Digital insurance marketplaces will capture more market share and will take over from broker-driven business as well as insurer online journeys. As consumers realise the value that can be gained by getting competitive quotes with improved customer journeys (e.g. GoCompare and Compare the Market) there will be no reason to go anywhere other than the online price aggregators. Complex commercial risks will become more digital as the specialist insurance markets adopt digital technology.
- Wellness products will proliferate in the market as insurers realise the benefits of promoting customer wellbeing. Companies like Vitality, Yulife and others will find their message resonates with more and more people, and there will be a drive to the higher quality offerings.
- Insurer consolidation and M&As will accelerate due to the changes in financial reporting requirements brought in by IFRS17. Many of the smaller insurers or who struggle to prepare the more complex accounting required by IFRS17 will get snapped up by more efficient, bigger insurers.
One thing is certain - 2022 is going to be a busy year for everyone!