2021 was a busy year for insurers. Beyond supporting customers through an ongoing global health crisis, they’ve also faced increased competition from a growing number of insurtechs and pressure from customers to deliver a seamless, digital-first experience—all in addition to ensuring the overall customer experience is positive.
All of these changes in the industry call for insurers to be more agile and open to change and innovation. 2022 is sure to continue to disrupt the status quo. Forrester agrees. In their predictions for the upcoming year, they said,
"2022 is a year to be bold. The old ways of working no longer work. The future is up for grabs.”
Here are five trends we expect insurance companies around the world to see in 2022.
1. Customer-first everything.
To differentiate from the competition, insurers will look to hyper-personalize the customer experience and incorporate the customer perspective into their strategies from beginning to end. Improving the customer experience (CX) will be top of mind for insurers in 2022 and beyond.
In particular, according to research from Forrester, primary CX investment areas of focus will include:1
-51% improving online customer experiences.
-35% producing faster product launches.
-30% improving omni-channel/cross-channel customer experiences.
-30% improving the value of customer engagements.
To stay competitive and win market share, insurers will need to elevate the customer experience more than ever.
2. A seamless claims experience.
Delivering a frictionless, omni-channel claims experience is a key component of providing a connected insurance experience. Besides purchasing their policy, it’s likely the next touchpoint many insurers will have with their policyholders. In fact, 87% of policyholders say the claims experience directly impacts their decision to remain with their insurance provider. Speed of settlement and process transparency are the most important contributors to the customer experience.
Furthermore, experts predict that property and casualty insurers will see a rise in claims associated with natural disasters in 2022. The World Meteorological Organization found that a disaster related to a weather, climate, or water hazard occurred every day on average over the past 50 years—a five-fold increase over the 50-year period. These disasters cause $202 million in losses daily. Given the surges in FNOL these claims are likely to bring this year, eliminating inefficiencies and bottlenecks in the claims process will be of the utmost importance.
With this in mind, insurance companies will need to prioritize increasing straight-through processing and creating a seamless claims experience for policyholders. By ensuring bumps in the road are avoided and the claims experience doesn’t give policyholders more to worry about, insurers can reduce churn and increase brand loyalty.
3. Implementing emerging technologies.
Artificial intelligence, machine learning, telematics, and IoT have been around for years now. However, we are increasingly seeing these technologies move from ideation to reality. For example, insurers are using IoT solutions to detect water leaks and frozen pipes and issue real-time alerts to help policyholders minimize risk and prevent losses.
In addition, telematics continues to explode in popularity. By 2023, 140 million people worldwide are expected to subscribe to telematics services, including in-car applications that track driving behaviors or personal fitness trackers that gather health-related data.
However, unlocking the full potential of telematics sources can be a challenge, especially given insurers’ disconnected legacy core systems. Right now, insurers have access to huge troves of data, but their existing technology often holds them back due to a lack of integrations and APIs.
In 2022, we expect to see more insurers looking to technology like low-code to create a single engagement layer. With low-code, insurers will be able to unify and extend their data so they can take full advantage of these new advanced data sources and incorporate them into their algorithms to increase profitability as they look to the future.
4. Increased adoption of connected underwriting.
As insurers look to improve the customer experience and increase efficiency, more and more insurance companies will prioritize accelerated underwriting initiatives. Potential policyholders are looking for digital, expedited experiences, and this means a higher demand for quick quotes.
To expedite the submission, quote, and bind process with efficiency while controlling the risk taken on, insurance companies will look to automate the repetitive tasks in their underwriting workflows and equip their underwriters with all the pertinent information they need in one place to make faster, more informed decisions.
Accelerating underwriting processes is gaining traction in the industry: in 2021, over 40% of life insurers had either already incorporated some degree of accelerated and automated underwriting into their new business process or had imminent plans to do so—and increase from 18% the year before. Property and casualty insurers also see a need to support underwriters in handling the often complex quote and bind processing with modern, automated workflows.
5. ESG management will take priority.
Environmental, social, and governance (ESG) efforts will continue on their way to the forefront in 2022 across the insurance industry. The COVID-19 pandemic, an intensifying spotlight on climate change, and emerging social movements have all given rise to more socially and environmentally responsible consumers. As a result, we’ll likely see insurance companies be more transparent with their ESG practices in 2022.
But to do so, they’ll need to get their ESG-related data in order. Insurers often rely on 10, 20, or even more than 30 systems to house this data. A key challenge the insurance industry faces is quickly adapting to changing ESG requirements, which means gaining visibility into all ESG data elements across the enterprise and validating them against a list of evolving ESG criteria and attributes. Insurance companies will likely adopt technology such as a low-code platform to assist in ESG efforts.
2022 will be a year of accelerated digitization.
Insurance companies will continue to evolve in the coming year as a means to stay differentiated and to avoid being left behind by today’s consumers. Technology plays a major role in all these trends we’ll see in 2022. Insurance companies can invest in a low-code platform to unify their technology, staff, and mission-critical data to streamline processes and deliver better experiences for their policyholders.
1 Forrester Analytics Business Technographics® Priorities and Journey Survey, 2021, US Insurers. Base: = n of 59