It’s no surprise that the events of the past few years have had a significant impact on the insurance industry. In 2023, carriers can expect to navigate quite a bit of turbulence as rising interest rates, the impact of the Russian invasion of Ukraine, and other issues continue to take hold — but it’s not all bad news.
Many of the latest trends in the insurance industry point to a rise in the use of technology to save money, improve customer experiences and mitigate risk. This can create real opportunities for carriers that are willing to embrace the way of the future. Following, you’ll find a brief look at six of the key insurance industry trends for 2023 and some insight into how you may be able to take advantage of them to grow your business.
1. The Impact of Inflation and Costly Claims
Severe weather incidents from hurricanes to floods created more than $165 billion in losses across the United States in 2022. At the same time, inflation and the Russian invasion of Ukraine continued to push the cost of nearly everything to levels not seen in some time.
It’s anticipated that ongoing supply chain issues and material costs will continue to elevate the cost of claims. While inflation is expected to decrease in 2023, it’s still projected to remain high related to historical averages. This will increase the cost of everything from customer acquisition to wages, healthcare and more. As carriers deal with the financial impact of this situation, many will have no choice but to pass at least a portion of the higher costs on to consumers.
While the increases may be necessary, consumers are not likely to take them sitting down. Carriers should be prepared for pushback as consumers shop around for the best price, reduce their coverage or drop it altogether. In fact, insurance predictions from many industry experts suggest that policy lapses will increase by 20% as consumers face the need to cut back on their spending.
2. Insurance Carrier Consolidation
One of the most important insurance industry trends of 2023 is the anticipated exit of smaller carriers and others that are not well-funded enough to survive the current economic challenges. It’s expected that a large portion of these companies will be bought out by larger, more established and better-funded companies or will be unwound and shut down. While this will be a significant threat for some carriers, those that are strong enough to survive this trend stand to benefit from the competitive relief it brings.
3. Difficulty Hiring and Retaining Top Talent
Finding and retaining qualified employees will continue to be a long-term risk for insurance carriers in 2023 and beyond. Many of the top performers are aging and retiring from the workforce. This has resulted in a shrinking supply of qualified individuals while demand across the industry remains high.
Leading carriers will begin to sharpen their messaging and brand purpose in an attempt to attract younger workers to the industry. Many will also begin supporting their current workforce with updated technology and providing some services using artificial intelligence (AI) solutions. This will allow them to streamline their processes and continue providing adequate levels of customer service while maintaining a smaller workforce.
4. A Turn to Technology
Despite these potentially concerning insurance industry trends, many insurance carriers are doubling down on their technology investments. From using satellite imagery to assess a property’s risk profile to using auto telematics to monitor consumers’ driving habits, there are many ways technology can reduce costs and lower carrier risk, including by helping to reduce preventable claims such as water leaks.
Investments in technology can also help carriers streamline their operations, create efficiencies and provide a better overall customer experience. Carriers with the means to make these types of investments now will be able to position themselves for long-term growth.
5. Increased Focus on Customer Service
Insurance carriers hoping to overcome the current challenges to business growth must adopt a customer-centric operating policy. Not only do customers want affordable policies and a streamlined experience, but they also expect highly personalized offerings and interactions that are relevant to them.
Carriers that embrace data-based technology will be able to easily make the switch from a product-focused approach to one that is truly focused on the individual needs of each customer. This may create opportunities to attract customers away from other carriers who have failed to adjust.
6. IoT Loss Prevention
Perhaps one of the most exciting insurance trends expected in 2023 is the increased use of internet of things (IoT) technology to reduce claims risk. While smart home technology is certainly nothing new, carriers are beginning to embrace it as a way to catch issues, such as leaks or flooding, before they can create significant damage and lead to costly claims and losses. For example, Notion’s multifunctional sensors detect smoke, carbon monoxide, water leaks and room temperature changes. With Pepper, insurance carriers, retailers, OEMs, and more can quickly set up their own custom IoT programs and products to fit their needs.
Embracing detection technology creates an advantage for carriers and policyholders, allowing both to save money. This can also help position carriers as forward-thinking and willing to take extra steps to protect their customers. In a highly competitive market where costs are the primary concern, this type of differentiation could be the deciding factor for some consumers.
Some Final Thoughts
Insurance industry trends change from year to year, and 2023 is not the first time carriers will face financial challenges. The good news is that technology upgrades will create opportunities for those that are willing to make the investment.
To learn more about how partnering with Notion can help you take advantage of this year’s top insurance industry trends, contact us today to schedule a call with our team.