5 predictions for the insurance coverage trade in 2022
For many of us, ringing in the new year means making resolutions for better health and wellbeing. Whether for business or pleasure, we have to consider the scenarios that threaten or enable our success. The insurance industry is no different.
Around this time last year, the world was eager for COVID-19 vaccines to end the pandemic and the need for physical distancing and travel restrictions. While we’ve seen some relief, new variants have emerged that require our continued vigilance in controlling the spread of the virus.
Despite the ongoing uncertainty, the economic recovery continues with global growth GDP should grow 4.9% in 2022. This GDP growth would suggest that greater Demand for insurance products and services was imminent.
Like us in our Insurance revenue landscape 2025 Report, we expect global insurance industry revenues to grow to $ 7.5 trillion by the end of 2025. Here are five scenarios that insurers looking to get a share of that revenue in 2022 need to consider.
1. Electric vehicles should develop as a growth segment for insurers
The globe Electric Vehicle Market is projected to grow from $ 171 billion in 2020 to $ 725 billion in 2026 – a CAGR of more than 27%. We expect 115 million by 2030 Electric fleet vehicles global. These cars, trucks and vans are entering the global insurance market as existing auto premium growth slows in key markets such as the US, UK, Germany and China.
This is a growth opportunity – not just a replacement for the decline in traditional auto awards! Electric vehicle customers will have additional needs, such as charging at home and quick access to charging stations when they are not at home. Innovative, customer-oriented insurers Those who offer these types of value-added products and services will have a competitive advantage – in a risk sector that is high on most sustainability and ESG agendas!
2. Sustainable supply chain and inventory management risk will accelerate product reinvention
The supply chain disruption caused by COVID-19 is likely to last well into 2022. However, the associated business interruptions and frustrations they cause can wear off with the reinvention of traditional cargo and cargo insurance products. The digitization of cross-border trade and the spread of sensors and other IoT and networked technologies across supply chains enable real-time access to risk data. Advanced analytics and AI now enable insurers to offer risk mitigation and management solutions and, if necessary, automate claims payment.
Such Insurance quotes accelerated in 2021 when valuable shipments of COVID-19 vaccines went around the world. In 2022, expect more insurers to apply these innovations more broadly and beyond compensation to help their clients manage core operational risk.
3. A property price and profitability calculation is imminent
Inflationary pressures are now exacerbating the more systemic problems of inverted risk models and rising capital requirements that have already driven property insurance prices higher. The US yearbook inflation rate reached 6.8% in November, its highest level in four decades. The next two decades are expected to see steep increases in both Premiums and risk concentration before catastrophic events related to climate change and increased urbanization in emerging countries. 2022 is the year for the price and profitability calculation within the property.
4. Insurance operating models will adapt to seismic shifts
The insurance industry is now operating on the fault line of two tectonic plates: COVID-19 and the Great Resignation. In 2022, the pressures and the changes they create will force insurers to disrupt longstanding training models that the industry has relied on to qualify key roles like claims and insurance. They also exacerbate the ongoing battles for talent acquisition and retention in critical roles Transformation of the insurance workforce like technology, analytics, and actuarial science. Insurers will always need people. But with fewer workers, they always need more people to be machine-backed, which is changing the way work is done, regardless of who is doing it or where.
5. Reset the underwriting workflow
Insurers are ready for their digital transformation and Investing in cloud platforms The past two years are paying off in the form of cost reductions and new business. In 2022 we will see transformation programs aimed at lowering cost ratios and increasing profitability through increased process efficiency and decision-making efficiency in underwriting. While efficient and effective underwriting processes and decisions are critical, most insurers’ underwriting platforms cannot handle the volume and complexity of the data required. As my colleague Michael Reilly put it: “We need a third generation of Underwriting platforms… essentially a big data platform tailored to underwriting. ”
Build resilience in 2022
We look forward to the coming year with hope. But hope is not a strategy.
The risk landscape is changing. The specific effects will vary for insurers depending on the business book and market positioning. However, scenario-based planning is essential to make your business strategy resilient in the face of uncertainty in 2022 and beyond.
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