What did 2022 bring for insurance?


As 2022 draws to a close, FinTech Global spoke to industry executives to find out what trends stuck around from last year, what new patterns emerged and what the defining characteristics of the year were for the industry.

For Maximilian Stratmann, chief revenue officer at Scanbot, one word which sums up the economic and political situation in 2022 is uncertainty. This uncertainty impacted industries on a mass global scale; insurance was no exception.

“The aftershocks of the Covid-19 pandemic, the Russian invasion of Ukraine, ongoing political quarrels with China, rising interest rates, and inflation levels not seen in decades are putting pressure on the insurance industry,” he said.

Aside from creating a general environment of instability, these events and trends have something else in common. Stratmann said they have been wake-up calls for insurance executives. “Especially when it comes to prioritising risk management and refining their crisis management planning. In that context, many insurers were also seeking to cut costs, by increasing operational efficiency, for example.”

Indeed, Eileen Potter, VP insurance marketing at Smart Communications, said that insurance organisations have shown “remarkable resilience” over the last several years, having to manage the fallout from both the pandemic and a shifting economy.

“2022 was a year of looking forward – and for insurers to figure out a way to manage and balance the pace of technology change and ever-increasing customer and employee expectations with the need for profitable premium growth,” she said.

Emerging trends

One key trend that has come to the fore in the last year, is the focus on data. Although this is not new, Smart Communications’ Potter said that insurance organisations have become much more data-driven recently.

“Insurers are getting much more granular when it comes to being focused on the business outcomes that they expect from adopting new technology,” she said. “There is also a clearly defined shift with respect to faster technology projects that might be more incremental but show measurable ROI.”

In addition, when it comes to data, the trend of using additional enrichment data through third parties has continued throughout 2022. However, Paul Richmond, product and change manager at Novidea, said that this year has seen new types of data emerge such as fire and hurricane weather data.

Another trend that Smart Communications’ Potter has noted, is a general spirit of innovation and collaboration. She said this may have been one of the best things to come out of the pandemic: the ability to come together as an organisation to keep the business running in an unfamiliar environment.

This is more than just a “feel-good workplace strategy” Potter continued; it is a smart business strategy. By creating a culture that prioritises teamwork and embraces continuous innovation, the leaders can set themselves apart from the laggards.

In terms of cyber insurance, Melanie Hayes, chief marketing officer at KYND noted that a defining characteristic of 2022 has been that more companies are looking to adopt more proactive risk management solutions that are tailored to their needs and boost their cyber resilience.

In addition, in a rapidly changing digital threat landscape, Hayes said there has also been a trend of using innovation and technology to ease friction between constituents of the cyber insurance value change.

“As more insurers and insureds begin to utilise ongoing threat intelligence capabilities and cyber risk management technology such as that provided by KYND,” she said, “This tension is becoming alleviated, as all parties in the cyber insurance value chain benefit from data transparency, actionable insights into prospective or existing insureds’ cyber exposure, and the ability to address critical vulnerabilities in a timely manner before these turn in a cyber incident.”

Continued trends

This past year also saw the continuation of old trends that either persisted or evolved in some way. According to Scanbot’s Stratmann, automation is a good example of this.

“Automation has remained a hot topic for insurers,” he said, “the industry still tends to rely strongly on paper documents: Many customers must send their invoices via snail mail, then wait weeks to have their claim reimbursed. Contracts are printed out and sent back and forth, which takes valuable time. Employees constantly have to manually enter personal data from paper documents back into computer systems.”

Automating such processes has allowed insurers to improve customer satisfaction by reimbursing claims within days, not weeks, Stratmann added. The only precondition is that clients submit their claim-related documents in high quality, especially by using a mobile document scanner like the Scanbot SDK.

The focus on customer experiences in the insurance industry has also persisted. To meet customers where they are, there has been an uptake in insurers looking to offer omni-channel and digital experiences.

Scanbot’s Stratmann said that in 2021, Scanbot SDK research showed that over 80% of insurers lacked a customer-facing mobile application. Moreover, almost 40% did not offer their insureds an online portal. Today, Stratmann said insurers are looking to deliver more multichannel insurance experiences to meet the growing demand of consumers to be able to access products anywhere, anytime. Although this trend has been around a while, Stratmann said it has only recently begun to gain traction in the US market.

Consumers are not the only ones looking to access services anytime, anywhere. According to Peter Gregory, sales manager at Novidea, brokers also need this ability. “Hybrid working and broking-on-the-move has been a growing trend for the last few years, and digital ways of working are now expected by both employees and clients,” he said. This means the industry will see a continued growth in the use of cloud-native platforms.

Finally, Tom McFarland, product manager at Novidea, said that 2022 has continued to see InsurTechs, insurers and end-clients reaping the benefits of IoT. This includes flood forecasting and vehicle and building security and reporting. “This will lead to further adoption of IoT across insurers and business lines. We expect this to continue growing with innovative new products using technology not traditionally associated with insurance, such as weather data and construction data.”

The squeeze on finances

When reflecting on the past year, Alan Haskins, insurance business director at Quantexa, said 2022 was characterised by economic instability, supply chain disruption and global conflict, in addition to climate risk and high inflation.

The property & casualty market, he said, was expecting to get back to profitability post-pandemic, but the sudden inflationary pressures soon dampened these ambitions. Moreover, rising claims costs above and beyond normal inflation has led to increased costs for automobile parts, building supplies, durable medical equipment, fuel, and energy prices, which all contribute to claims severity, Haskins said.

The squeeze on consumer finances and the cost-of-living crisis has impacted all businesses and industries, insurance and InsurTech is no exception. FinTech Global spoke to industry experts earlier in the year about how this has impacted consumers’ priorities as well as insurers’ books.

According to Haskins, this has also resulted in changing consumer behaviour. For example, consumers are purchasing less fuel and travelling fewer miles, this has an impact on auto insurance pricing, coverage and risk.

In the cyber insurance industry, KYND’s Hayes said she expects cyber insurance demand to experience knock-on effects from surging inflation and the cost-of-living crisis. She pointed to this year’s survey by GlobalData which found that 17.3% of SMEs did not have cyber insurance in 2021 due to coverage being too expensive, while 29% had cancelled their policy in their efforts to cut costs.

“In light of insurers’ inability to lower the costs of premiums given the ever-growing risks, Hayes said, “we anticipate that the number of businesses cancelling or postponing their cyber insurance policy will increase as we head towards the end of the year. This is despite the clear necessity and benefit of having cyber coverage as part of any business’ risk management programme.”

A tough climate

2022’s tough economic climate was not only characterised by a squeeze on business and consumer budgets, but it also created a difficult fundraising climate for companies.

Scanbot’s Stratmann noted that the Covid-19 pandemic was followed by a relatively strong 2021 recovery year, however insurance dealmaking took a step back in 2022 due to the political and economic uncertainty. “Whether it will rebound to 2021 levels will depend on economic developments in the near future,” he said.

Indeed, KYND’s Hayes pointed to research from GlobalData which revealed that investments into InsurTech market participants fell significantly in 2022.

Despite this funding barrier, tough global economic conditions may have served as a catalyst for forging strategic partnerships and creating new opportunities as InsurTechs looked to collectively engage in tackling common issues.

“As businesses around the world are seeking optimal methods of cutting operating costs in the face of a crippling cost-of-living crisis,” Hayes said, “the InsurTech market witnessed numerous cases when combined efforts and technology, and subsequently boosted innovation empowered active problem-solving, maximised efficiency gains, and delivered practically and financially viable solutions for the benefit of their customers and stakeholders.”

Big breakthroughs

This year may have been a tough one for consumers and businesses alike. However, adapting to challenging market conditions brought about some positive changes.

According to Quantexa’s Haskins, insurance companies are more adaptable. “More companies are now able to offer new and innovative products, with speed, accuracy and at better pricing than ever before,” he said. They are able to offer, sell and underwrite policies, covering new risks through new ways of distribution, Haskins added.

Smart Communications’ Potter said that insurers have also begun to look at how to leverage technology to improve the “total experience.” By that, she means one that benefits both the customer and the employee.

“For instance, improving infrastructure via cloud technology can positively impact the bottom line for organisations with respect to efficiency, scalability, and costs, but is also helpful for IT with respect to attracting and retaining talent.”

Companies have also placed an increased focus on company culture and the well-being of their employees, Potter added. “The business of insurance is about protection for individuals, families, and businesses, but often that is not how the industry is seen through the lens of public opinion. It seems that many insurers have taken note of this.” By adding diversity, equity, and inclusion (DEI) initiatives, along with a greater commitment to overall global wellness through environmental, social, and governance (ESG) initiatives, insurers are turning around their historical reputation.

Copyright © 2022 FinTech Global

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