During 2020, Coronavirus has impacted everything, and insurance is no exception. Despite a strong start, the pandemic has prompted some to call 2020 “a lost year”. Whilst this may be true in some senses, it has certainly prompted insurers to diversify and look for new opportunities meaning some businesses will potentially emerge stronger and more agile than before.
The most successful organisations will use their hard-won knowledge of 2020 as they prepare to grow their way into 2021. So, looking ahead, what should we expect to see …
THE INTERNET OF THINGS
An increase in data and new technology is allowing policies to become more individually customised, and insurers can minimise risk and improve accuracy by utilising more metrics during the underwriting process. 2021 will see insurers including new data points from the Internet of Things (wearables, devices, social media etc.) ultimately increasing the accuracy of pricing, and incentivising risk-averse behaviours. This should lead to cost saving for insurers and ensuring fairer pricing for consumers
HARD MARKET CONDITIONS
It would be naïve to hope that market conditions would improve at the stroke of midnight on December 31<sup>st</sup>. Insurers need to be prepared for hard market conditions to continue moving into 2021 which will feature limited growth in some areas and increased premiums. Policies will include new terms to protect Insurers against any further waves of COVID-19. Although higher premiums are expected in 2021, Insurers may increase efforts to retain customers by adding value and enhancing the customer journey. Product innovation and really listening to consumer needs will be more important than ever
THE MILLENIAL GOLDMINE
The Millennial consumer base (those aged in their 20s and 30s) is one of the largest population groups. They increasingly expect flexible and personalised products, and the customer journey is paramount. 2021 will see an even greater desire from Insurers to penetrate this tech-conscious group. Simplifying products, conveying good value for money, and making sure products are attuned to their specific behaviours will continue to be high on the agenda next year
CYBERSECURITY
Cybersecurity will remain high up the priority list for 2021 with many insurers acknowledging that more needs to be done to improve security. Next year will see an even greater increase in demand for top tier talent in this space, particularly those with knowledge of emerging Blockchain technology
ARTIFICIAL INTELLIGENCE
2021 will continue to see Insurers explore - and in some cases embrace - AI and machine learning technology, allowing some areas of insurance to be fully automated. Work needs to be done in 2021 to ensure businesses culturally embrace this technology. For it to be truly successful, customers and internal stakeholders need to be fully educated on its benefits for the long term
ENVIRONMENTAL, SOCIAL & GOVERNANCE
Although not new, ESG strategies will continue to take centre stage in 2021. Customers and investors expect strong ESG strategies and this trend will pick up pace. In the future, underwriting decisions could be affected by their clients’ behaviours related to environment. Underwriters will need to make their clients aware of ESG related risks and work closely with them to create solutions. ESG could certainly create new market opportunities.
In conclusion, the insurance industry is resilient and should be able to bounce back in 2021. According to Swiss Re, global insurance premiums have fallen in 2020 but are set to recover in 2021, with emerging markets leading the way. There is certainly plenty of opportunity moving into 2021, particularly for those who focus on improving and embracing new technologies which will enable the formation of new products to suit a younger generation.
If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Clare Nash via clare.nash@normanbroadbent.com or on +44(0)7483 015591