Future Trends For Insurance Market In 2022

Throughout 2022, insurers would react to the long-term effects of the pandemic while continuing to advance further into the future of digital insurance

COVID-19 has accelerated the transformation of the insurance industry in multiple aspects. The COVID-19 crisis continues to have a significant impact on individuals, society, businesses and the wider economy across the globe. The insurance industry has not escaped its impact but insurers have responded quickly to the crisis.

Pandemic has resulted in an erratic landscape, with increased demand for some insurance areas – such as event cancellation – and dramatically reduced demand in others, such as travel. Yet, it also brought a much-needed push for insurers to innovate. According to Gartner, 87 per cent of insurance CIOs reported an increase in the use of digital channels to reach customers in 2020.

While COVID-19 has sparked the demand for insurance, it has also exposed the operating model vulnerabilities in distribution, servicing, and customer retention. Throughout 2022, insurers would react to the long-term effects of the pandemic while continuing to advance further into the future of digital insurance.

Digitalisation of distribution channels

As per the World InsureTech Report 2021, more than 60% of insurers agreed that Covid-19 impacted their customer acquisition efforts. Physical sales forces and intermediaries are responsible for the majority of insurance distribution across geographies and lines of business. But continued physical distancing is having dramatic and immediate impacts on insurance distribution. Since the onset of the pandemic, insurance companies have been forced to adopt digital-hybrid solutions by incorporating robo-advisors, video conferencing, and web chats. Frontline professionals will continue to play a critical role in reaching customers, insurers must embrace the integration of physical and digital channels once the crisis subsides. Insurers would be equipping their agents/sales force with new-age digital tools to enhance policyholders’ engagements and boost sales.

Focus on GIG economy

As per a BCG report, the gig economy has the potential to serve up to 90 million jobs (roughly 30% of India’s non-farm workforce), add up to 1.25% to India’s GDP and create millions of new jobs across all sectors of India’s economy.

Since gig economy workers don’t have employer-provided group insurance schemes, insurance companies should focus on this untapped market opportunity. Internet and digital channels use is rising amongst this underserved market segment. Insurance companies can now offer insurance products like sachet insurance policies meeting the needs of this market segment. With the help of technology, insurers can provide tailor-made products which are also cost-efficient. This will also help in reducing the protection gap in this underserved market.

Hyper personalisation

With the help of data analytics, Usage-based insurance, Pay as you Go and Pay as You Live (PAYL) insurance can be provided. As per the Global Data, UK Insurance Survey, 70% of customers would consider sharing wearable’s data if financial incentives are provided to

them. With the help of artificial intelligence and data analytics, insurance companies would provide innovative and customised insurance products. This would also help in engaging customers and providing value-added services to them. Traditionally, insurers provided minimal customer engagement opportunities. Insurers should now collaborate with wellness platforms and sponsor events that encourage customers to lead healthier lifestyles.

Reinvent skills and capabilities

The path to growth in the coming years will require new talent and bolder strategies. By 2030, 44 per cent of insurance work activities have the potential to be automated. Roles that focus on repetitive work and manual processes will cease to exist in their present form, while technology and digitally savvy workers will increase in value. Emotional, interpersonal, and social skills will also become more critical, especially for customer-facing agents who can help consumers address their changing financial and coverage needs. However, these workforce shifts will not eliminate jobs—net new jobs will be created due to advances in automation—but instead, change the nature of the work. The COVID-19 pandemic has only accelerated such trends.

Collaboration is the way forward

Insurers would partner with third-party ecosystem players with solid customer bases to reach the long tail of underinsured market segments. As per the World Insuretech Report 2021, at least 50% of the customers are willing to buy insurance from BigTechs, product manufacturers, and Insuretechs. This would also help in increasing the long stagnate insurance penetration in India.Covid-19 has propelled fewer income customers to adopt bite-size insurance that provides a basic safety net during crisis time. Cross-selling and upselling insurance products using the third party ecosystem would help in increasing the insurance penetration.

2022’s new normal environment would require insurers to take initiatives that would help them to capture emerging opportunities and also create value for money for customers and other stakeholders.

*The author is Dr. Pallavi Seth, Faculty, Amity University

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