10 Insurance Industry Predictions for 2022

As the new year gets underway, we begin to see trends emerge in the world of insurance. By understanding what is likely on the horizon, insurance professionals have a chance to prepare and adapt, ensuring they’re in the best position to thrive.

If you want to make sure you’re ready for what’s to come, here are ten insurance industry predictions for 2022 from industry experts.

10 Predictions for 2022 from Industry Experts

Kim Hedrick CPCU, CIC – Enterprise Sales at ePayPolicy

1. Digital Transformation Moves Forward

Digital transformation hasn’t been quick in the insurance industry. However, it became a necessity due to the situations created by the pandemic. Shelter-in-place orders and social distancing requirements altered the landscape dramatically.

Kim believes that digital transformation will continue moving forward, even if it was initially a slow start. “Digital transformation has taken longer in the Insurance Industry, but we are making great strides,” said Hedrick. “Regardless of the segment you are in – carrier, wholesale, MGA, specialty or retail – your team is more productive today by relying on digital tools that were not even an option just a few short years ago.

“The pandemic pushed us all out of our comfort zones, and we were forced to adopt certain technology quickly that we may have been resistant to before. For me, becoming proficient in six different virtual meeting platforms and mastering online grocery shopping was never a goal, but now that I have, I won’t be going back to doing things the old way.”

2. Increasing Digital Payments

As Kim mentioned above, digital transformation is increasingly the name of the game. While the impact on internal operations is significant, it will also affect how customers engage with insurers.

Just like insurers won’t move away from some of the technologies they’ve embraced during the past two years, “I think the same holds true for the Insureds that paid their premiums and signed their applications electronically for the first time,” Hedrick stated. “I believe they will continue to expect this type of convenience moving forward even when the pandemic is far behind us.”

“As our industry is adapting to digital transformation and providing Insureds with secure and convenient options for managing and paying their premiums, I think we will continue to see an increase in digital payments.”

Scott Howell – Owner of iProtect Insurance Services, co-host of The Insurance Guys Podcast

3. Rising Rates Will be the Norm

Rates increase based on several market factors. Along with repair and replacement costs, an increasing number of incidents and the rising severity of events can all be factors.

“Auto and Home rates will continue to trend upwards based on weather-related losses combined with an increase in the cost to repair both home and auto claims,” Howell stated. “Commercial and Business Auto will in some cases see significant increases depending on the type of risk and geography.”

4. More Embedded Insurance at Points of Sale

Another area that’s seeing growth is embedded insurance at points of sale. Along with being positioned as a convenience for customers, they can bolster the bottom line of companies looking to overcome pandemic-related hardships or other industry challenges.

According to Howell, “the industry will see an increase in embedded insurance at the point of sale as Vehicle Manufacturers and other industries continue to move towards creating another revenue stream to assist with their overall financial performance.” Insurance is a potential profit-driver, making it an attractive target. As a result, insurers should anticipate an expansion in this area, allowing them to adapt to the shifting climate.

Jason Cass – Owner of Agency Intelligence

5. Insurtechs Look Beyond Service and Claims

Initially, insurtech concentrated on the service and claims business areas, and with good reason. Those systems supported a range of everyday operations, making them prime targets.

However, remaining competitive requires more than effective service and claims management. “Insurtechs have catered to the companies on service and claims,” said Cass, “but now they realize that giving agent tools for marketing and sales will help everyone.”

Essentially, during 2022, expect expanding toolsets that focus on areas beyond service and claims, especially capabilities that focus on business expansion and customer retention.

Gabe Nix CIC, AU – Enterprise Sales at ePayPolicy

6. Workers’ Compensation Losses Will Continue to Have an Impact

Workers’ compensation costs relating to the pandemic were incredibly high. Considering that COVID-19 was an unprecedented event, the insurance industry couldn’t prepare for such an incident in advance. Additionally, making adjustments to certain policies wasn’t practical at the height of the pandemic, leading to a long-term challenge for those operating in the space.

“Industry estimates for workers’ compensation losses as a result of the pandemic range from $500-$750 million in claims for workers’ compensation carriers,” said Nix. “Profitability for workers’ compensation will take a hit until premium increases take effect.”

S&P Global

7. Cyber Re/insurance Prices Will Rise

As a side effect of increasing digital transformation, the number of cyber incidents is anticipated to rise. According to research from S&P global, pricing in the industry will increase in response.

“The trend toward digitalization will inevitably lead to a higher likelihood of cyber incidents,” said S&P Global. “Prices in the cyber re/insurance market could therefore rise sharply over 2021-2023, even doubling in some cases.” 

McKinsey & Company

8. Automation Is Becoming Commonplace

As part of the broader digital transformation trend, AI and machine learning-supported automation is on the rise. According to research by McKinsey & Company, “more than half of claims activities [will be] replaced by automation” by 2030.

William Trainer – Strategic Partnerships at ePayPolicy

9. Tech-Savvy Talent Will be the Key to Growth

Premium growth is expected to continue in 2022. As a result, finding ways to enhance the customer journey will be essential. According to William Trainer, “the lingering 3-year pandemic has only enhanced the need for more insurtech solution development and further digital transformation in the industry which allows insurance professionals to work remotely, and provides customers a pleasant online journey.”

However, that doesn’t mean the transition will be seamless. “One of the greatest challenges for the insurance industry in 2022 will be the ability to find and hire enough insurance tech-savvy talent to effectively manage the growth,” William Trainer stated.

Essentially, without tech-savviness, adapting to emerging solutions becomes challenging. In turn, this can result in impeded growth. By making tech-savviness a talent acquisition priority, embracing new systems come naturally, accelerating growth significantly.

Jerome Haegeli, Swiss Re Group Chief Economist

10. Insurance Demand Skyrockets

Research conducted by Swiss Re indicates that insurance demand is increasing and could be poised to break premium records this year.

“Market conditions suggest that positive pricing momentum will continue across all lines and regions,” said Swiss Re group chief economist Jerome Haegeli noted when discussing the research. “Inflation-driven higher claims development in all lines of business, continued social inflation in the U.S. and persistently low-interest rates will be the main factors for market hardening.”

Want More Insurance Industry Tips to Help You Thrive in 2022?

At ePayPolicy, we understand the importance of staying on top of emerging trends and shifting market conditions. That’s why we focus on remaining informed, allowing us to pass valuable information on to independent agents like yourself.

If you’re looking for more tips that can help your independent agency thrive in 2022, we’ve got you covered. Follow us on Facebook for more tidbits, tricks, and insights.