From a continued focus on sustainability, to the permanent remote workplace, to the ongoing marriage between data and customer behavior, I take a look at a few of the mega trends poised to influence the insurance industry in the year ahead.
Last month I spent time reflecting back on insurance in 2021, a notable year full of industry-wide growth, investment and innovation. Now, for my first blog post of the year, I’m looking forward at emerging and continuing mega trends within the industry to help answer the question: what’s next for insurance in 2022?
Global warming and climate change-related events like floods, droughts, wildfires and other severe weather events, are having a profound impact on insurers’ balance sheets (in terms of both assets and liabilities) and will remain a central issue to insurers in 2022. For P&C insurers and reinsurers in particular, the rise in catastrophe claims following a natural disaster (i.e. business interruption, property damage, crop impacts and so forth) continue to expose systemic vulnerabilities and aggregation risk. As a result, many insurers and reinsurers will be exploring new data models and product solutions (such as Parametrics) that offer methods for evolving their approach to loss prevention/mitigation and disaster financing in a time of complex risk. For many incumbents, all of this means the sustainability conversation will continue to expand at the institutional level, influencing everything from innovation, to regulation, to sustainable business practices, responsible investments and ESG goals.
The pandemic ushered in huge changes to many centralized workplaces and offices, with Covid-19 precautions and restrictions making decentralized, remote work the new normal for many employees around the globe. While some companies will be planning large scale return-to-work strategies in 2022, many others will implement best-of-both-worlds hybrid approaches or let their workers stay entirely remote, particularly in tech-related industries where dispersed teams are increasingly the norm. For insurers who are looking to retain and attract workers with specialized computing, engineering and data analytics expertise (in an incredibly competitive job market), the return to work issue is likely to be a critical issue this year, as flexibility in the work environment remains a top consideration for prospective and existing employees. Insurers working on tech-driven priorities like digitalization, emerging tech and data science will have to think about balancing employee needs and requirements with other organizational priorities.
As insurers transform their operations for increased efficiency and to address the needs of today’s demanding and tech-savvy customers, tapping into additional data sets and developing new products will be crucial to continued growth. In 2022, many insurers will be maintaining their 2021-level of investment to expand capabilities in these areas (digital ecosystems, emerging technologies and new data sources) and will also be working to address issues of customer experience by focusing on automation, connectivity (IoT) and personalization.
As incumbents continue to benefit from tech-driven partnerships and acquisitions, technological innovation will continue to play an outsize role in insurance in 2022. While much about the new year remains uncertain, opportunities for advancement and growth seem all but guaranteed.