The insurance industry has always been a cornerstone of global economies, providing stability in uncertain times. As we enter 2024, the landscape of insurance is poised for significant shifts and challenges. This year brings forth a confluence of factors—global issues, technological advancements, and evolving customer expectations—that will shape the industry’s trajectory.
The evolving climate crisis has propelled insurers to reassess risk models and diversify their portfolios to mitigate the financial repercussions of catastrophic events. The industry is aiming to distribute risk and in turn, reduce financial uncertainty and manage accidental losses. Here’s our insurance industry outlook and four predictions for 2024.
Embracing InsurTech for Operational Excellence
Insurtech solutions, encompassing AI-driven underwriting, blockchain for secure transactions, and IoT-enabled risk assessment, are poised to revolutionize traditional insurance processes. Consumers continue to desire digital services, interfaces, and experiences that match the standards set by fintech and e-commerce providers. “2024 is the start of a decade in which we stop changing and start transforming through the use of AI,” says Jason Casson, host of the Agency Intelligence podcast.
Many insurance processes, particularly claims management, are still labor intensive and require manual document review. Companies leveraging these tech innovations will streamline operations, expedite claims processing, and curate bespoke policies, aligning seamlessly with individual customer needs.
“The data shows that insurance leaders are ready to make future-forward decisions about the technological shift required to better meet customers’ expectations of a modern, digital-first experience,” said Roi Agababa, CEO of Novidea.
Though many organizations see investments in insurtech as an unnecessary cost, the reality is that there are many technologies that provide cost savings for organizations big and small. William Trainer, Channel Development Representative at ePayPolicy, states that insurtech trends will only gain momentum in 2024. “With blockchain, machine learning, AI, and the ability to automate what was once a mundane manual task, there is immediate ROI with insurance technology,” says Trainer.
Strategic Partnerships & Relationships
One of the biggest trends in 2024, will be a noticeable uptick in acquisitions (M&A). “With the abundance of new insurance technologies there will be opportunities to become more of an insurance ecosystem, especially with carriers,” says Trainer. Insurers should focus on capitalizing on potential synergies, especially in a recovering economy.
Collaborations between established insurers and agile startups foster an environment of innovation and synergy, enabling a more robust response to evolving customer expectations. Stronger client and partner relationships are key to insurance companies’ growth for the future. The goal is to prioritize customer centricity, offering comprehensive risk protection and solutions across products, services, and user experiences.
Dan Maloney, head of Enterprise Sales at ePayPolicy, believes that this is the year that embedded insurance “really takes off”. This poses both opportunities and threats to the industry. Auto insurers may face a major challenge and should therefore explore partnership opportunities early on. This convergence benefits consumers with loss-avoidance and detection capabilities and helps insurers build stronger client relationships.
According to PWC, strategic partnerships “not only can increase profitable growth, decrease loss ratios and create new revenue streams, but also improve public perception and create stronger brand loyalty.” Understanding and catering to the evolving needs and preferences of consumers will be paramount.
Prioritizing Inclusivity and Accessibility
Efforts to address the underinsured or uninsured populations will gain significant traction in 2024. Initiatives promoting financial literacy and inclusivity within insurance policies will not only mitigate risks but also contribute significantly to societal welfare. Insurers championing social responsibility and embracing inclusive practices are set to redefine industry standards. According to a Deloitte report, insurers are pivoting to incorporate more impactful sustainability, climate and equity into their corporate strategies.
In 2023, many insurers exited out of markets because of the rise in natural disasters. Consumers became doubtful of the insurance sector’s ability to serve as society’s financial safety nets. However, many insurers are now trying to find ways to prevent losses, educate their customer base, and provide coverage without taking financial losses.
To signal the importance of inclusivity and accessibility, Insurance Business America (IBA) has shared, for the third year in a row, a list of insurance companies with the best diversity, equity, and inclusion programs for 2024. Other insurers, as well as customers, are taking notes for the year ahead.
Balancing Innovation with Regulatory Compliance
However, amidst these transformative trends, regulatory compliance remains a cornerstone of the insurance industry. Companies must navigate a complex web of regulations and compliance standards while innovating and adapting to change. Striking a balance between innovation and adherence to regulatory frameworks will be crucial in ensuring sustainable growth and maintaining consumer trust.
“It’s a regulated industry. There were so many losses in 2023 but companies can’t just raise their rates too high,” says Maloney. As insurers increase their prices by 17% or more, customers are shopping around. Companies need to figure out how to keep customers satisfied and loyal while staying afloat.
An Outlier Year
The insurance industry in 2024 stands at the precipice of transformation. “This is going to be an outlier year for the industry. I think it may have very positive long term implications because players are being forced to utilize automation and technology strategically,” says Maloney.
Embracing technological advancements, fostering strategic collaborations, prioritizing customer-centricity, and championing inclusivity will be key tenets for success. As insurers navigate the complexities of an ever-evolving landscape, those who adeptly navigate these trends will not only thrive but also redefine the industry’s future.