The insurance industry continues to be in flux, undergoing several seismic shifts simultaneously. Now that we are officially in the new year, we can see these changes and accelerations in various ways. Read on for ten predictions for our industry in 2024.
1. Legacy tech out, innovative solutions in
It’s no secret that outdated tech stacks have lingered in the insurance industry far past retirement age. Many insurance organisations have wanted to modernise for years, but business interruption and customer adoption concerns have held them back. In 2024, with the latest solutions addressing those concerns and mounting pressure to stay competitive, even the most risk-averse organisations seem ready to take the leap and digitally transform their business.
Novidea’s 2024 global survey found that 99% of insurance organisations have a plan in place to change their technology systems, specifically their broker/agency management platforms and policy administration systems. For 41%, this upgrade will happen in the next 12 months.
In the UK market, transformation is being accelerated by the impending requirements needed to comply with Lloyd’s Blueprint 2.0, which is forcing brokers’ hands, with the majority of firms looking to upgrade their core systems in 2024.
2. Increased customer centricity
When it comes to customer experiences, the bar continues to climb. Customers want user-friendly self-service portals and easy access to help when they need it. They want seamless processes that feel tailored to their needs. In recent years, insurance organisations have made steady improvements to stay competitive. Claims can now be filed online, bills paid from a cell phone, and policies issued in minutes.
In 2024, those improvements will continue—and even accelerate. Novidea’s survey showed that when it comes to selecting new technology, 87% of respondents said providing value to customers is either the top or the second-highest priority. In other words, it’s not worth doing if it doesn’t improve an organisation’s relationship with their customers.
3. Better claims handling, or else
In 2023, Lemonade shocked the insurance industry with the news that they broke the world record by settling a claim in two seconds. They achieved this through their use of AI and machine learning. And, while that’s not a realistic benchmark for most claims handling, it certainly shows that insurance organisations must deliver a better, smarter, faster claims experience to stay competitive.
The claims process is often the cause of customer frustrations and complaints. It’s often the only time a customer interacts directly with their broker or insurer. In 2024, we’ll see two groups of organisations: those that leverage technology to refine their claims process and those that start losing customers.
4. Innovation and development of new insurance products
In the last few years, the insurance industry has seen a wave of new and successful products. For example, cyber insurance was once strictly niche, needed only by sophisticated tech companies. Now, it’s a requirement for a wide range of organisation types. The same can be said for pet insurance, which has now grown to billions in premiums.
Offering new and unique products is an effective strategy for insurance organisations looking to increase their revenue and diversify their business. 2024 will see this strategy continue, with increased competition driving product innovation.
5. Escalating war over insurance talent
In 2023, companies like Amazon, Alphabet, and Microsoft laid off thousands of workers due to ‘economic uncertainty’. That’s a lot of talent looking for work, and it’s an opportunity insurance organisations should not miss. With almost 400,000 people expected to retire from the insurance industry in the next few years, filling those critical roles with fresh talent is going to be crucial. And yet, eight out of ten millennials reported having no knowledge of employment opportunities in the industry. This is primarily due to the industry’s reputation as old-fashioned.
So, 2024 will see significant job openings in our industry and also fresh talent made available by layoffs. The question is which insurance organisations will attract the best talent by modernising their business and embracing new tech.
6. More frequent and severe catastrophic events
Floods, hurricanes, landslides, extreme heat, and other events are becoming increasingly common and damaging. While these result in large claims and losses for insurers, they’re also changing the way people think about insurance. In a less certain world, insurance products—even those with higher premiums—become more attractive.
2024 will sadly have its share of natural disasters, which will make insuring and being insured more expensive, but also more clearly prudent.
7. Data’s ever-increasing role in risk assessment
Now, dozens of new companies gather data (from third parties, geospatial images, drone footage, public records, and more) and provide it to insurers, brokers, and MGAs. This data is potentially worth the expense if you have the tools and resources to put it to proper use. The massive volume of these datasets makes it cumbersome to efficiently extract actionable insights.
In 2024, more and more insurance organisations will partner with Insurtech
companies for help leveraging data in risk assessment, leading to better, more strategically sound decisions.
8. The end of the M&A honeymoon phase
Last year, the M&A spree continued as insurance organisations gobbled each other up to drive growth. It’s been exciting, but what comes after the deal is done?
2024 will be the end of the honeymoon, when newly merged organisations integrate cultures, standardise technology and workflows, and all the other steps in becoming one company that operates from a single source of truth.
9. The rise of vertical SaaS
Legacy Insurtech solutions were decidedly horizontal—designed to be one-size–kind-of-fits-all. In other industries, we’ve already seen the popularity of software tailor-made to suit the needs of very specific verticals.
In 2024, the vertical revolution will truly take hold in our industry, as more and more tailor-made software demonstrates how much truly bespoke digital tools can benefit a business.
10. The continued rise and adoption of generative AI
By January of 2023, ChatGPT was the fastest-growing consumer software application in history, with over 100 million users. 2023 saw the release of several competing products as businesses and consumers learned what all these tools could (and could not) do for them.
In 2024, these products will continue to become a bigger part of how businesses and people operate. As these applications continue to improve, insurance organisations will continue learning how they can leverage them for underwriting, claims handling, and more.
All signs are pointing to a significant shift in the insurance industry this year. With so much change happening so quickly, it’s easy to get overwhelmed. Remember that all industries go through these evolutionary phases.
The decisions you make now about your insurance organisation will translate to real opportunities for growth in the future.
