Five emerging themes looking to impact the insurance industry in 2022
Over the last two years, insurers and brokers have navigated extraordinary events that have brought profound changes to the world in many different ways. How will the industry compete, evolve and prosper in 2022? If the pandemic has taught us anything, it’s the danger of trying to predict the future. Nonetheless, here are five emerging themes that could shape the insurance industry in 2022.
Brokers will be on the frontline in combating underinsuranceThe risk of underinsurance will loom large next year, as global supply chain pressures and labour shortages trigger a spike in inflation. As the price of raw materials rise, some businesses could face a claims shortfall if reinstatement costs exceed their sums insured. More than ever, brokers will play a critical role in ensuring clients have the correct policy limits in place to cover the risks they face.
If global supply chain issues persist, insurers will also need to work hard to keep claims lifecycles as short as possible. Expect insurers to draw on both internal and external solutions to speed up claims processes. Here, we could see a growth in the use of ‘green parts’ and more insurers roll out ‘repair not replace’ schemes – marking the start of a bigger shift across the industry towards more sustainable claims solutions.
The competition for talent will heat up
In a highly competitive labour market, insurers and brokers will have to double-down on their efforts to attract and retain the best talent. The pandemic has sparked what some commentators are calling the Great Resignation, as people quit their jobs in search of a better work-life balance or a different working environment. Employers that offer progressive working practices and enhanced benefits – from advertising all jobs part-time to extended paternity leave - are likely to have an advantage in the recruitment market next year. As the industry looks to bridge the talent gap, insurers and brokers should also search outside of the industry for fresh skills to build on the talent already in the sector. By promoting inclusion in all its forms, employers can broaden diversity in the workplace, and enhance the competitiveness of the sector.
Data sharing between insurers and customers will come of age
Application Programming Interface (API) may not be the most inspiring of names, but expect to hear more about this technology next year, which has the potential to turbocharge insurers’ operations. API allows insurers to build connections between systems that wouldn’t normally talk to each other.
The insurance industry has vast data at its fingertips but doesn’t always leverage it effectively for customers. The deployment of API allows insurers to exchange data between customers, brokers, underwriters, claims and risk engineers to drive trading efficiencies, and create insights that help customers better manage their risks. Zurich, for example, already has live feeds of global programme data, policies, claims bookings and risk engineering data to some customers. Next year, we’re likely to see this technology come increasingly to the fore, as insurers drive deeper relationships with brokers, and sharpen their focus on risk mitigation, rather than risk transfer alone.
Extreme weather will intensify the focus on risk mitigation
It goes without saying that ESG - and sustainability in particular - will remain high on boardroom agendas in 2022. But as well as continuing to reduce their own carbon emissions, expect insurers to step up efforts to help customers protect their businesses from climate-related risks. The flash floods that struck London last summer, and Storm Arwen which battered the country recently, were reminders of the increasing frequency and intensity of extreme weather.
Against this backdrop, insurers will play a growing role in helping Britain to boost its resilience. The trend, however, won’t be as much towards traditional risk transfer solutions but prevention and mitigation. Whether it’s helping people to improve the resilience of their homes to flooding, or businesses to assess their exposure to climate risks, insurer will lead the charge in helping Britain to become storm-savvy.
Trading conditions will remain challenging
In 2022, trading conditions are likely to remain challenging, and long-term sustainable pricing will continue to be a priority for the industry. From global supply chain issues to climate change, we need to stay alert to the multitude of complex macro and micro issues which impact the insurance industry. As ever, placements will require expert broking; quality sharing of information between customers and insurers; and clarity around terms and conditions and programme structures. If the pandemic has taught us one thing it’s that the only certainty in this world is uncertainty. Whatever 2022 holds for the insurance industry, it won’t be a dull one.
