Now that we are at the start of 2023, we thought it would be beneficial to explore the trends that are expected to impact the insurance industry this year, to understand how insurers can better prepare themselves for the year ahead to ensure they remain competitive in the market.

Focus on ESG

Environmental, Social, and Governance (ESG) strategies have already become an increasing part of insurers’ culture which is expected to continue into 2023. ESG impacts an insurer’s brand reputation and levels of risk and involves insurers not only being evaluated by their sustainability reports, but also by their “initiatives on how they are addressing carbon emissions, taking steps to diversify their workforce, and increasing transparency in their governance structures” (Netscribes, 2022). ESG is quickly becoming a competitive differentiator in the insurance industry, which suggests that insurers should focus on ensuring that their ESG processes are at the center of their strategy in 2023.

Furthermore, Oxbow Partners (2022) explained that the industry seems to be focussed on the ‘E’ from ESG in terms of product design at the moment, for example, Vitality offers a motor policy pitching discounts for ‘car-free days’. This is a trend that will likely continue in 2023, however, this leads to the question of whether customer demand for environmentally friendly products will be sufficient if the price is higher than other options, especially due to the cost-of-living crisis that we are currently facing (Oxbow Partners, 2022).

 

Insurtech data sources will continue to increase

The Insurtech industry is already experiencing and is expected to continue to undergo rapid adoption of AI, Blockchain, and IoT through 2023. For example, insurers are leveraging the technology transformation driven by Insurtechs to build a business model that uses AI at its core (Netscribes, 2022). The integration of these technologies offer many benefits including improved claim processing, personalised insurance services, highly reliable data storage, and transmission, and increased automation, etc (Mint, 2022). The digital transformation of insurance operations is reshaping the current and future state of the industry; therefore, it is vital that insurers swiftly adopt these technologies in order to stay competitive in the market.

In addition, as the adoption of AI, machine learning and automation become more widespread across all sectors of the insurance industry, Artificial (2022) predicts that there will be a steady rise in the adoption of underwriting workbenches as they will become a “necessity for those moving to a digital way of working.” An underwriting workbench is a relatively new concept, that has been described as a “single cockpit that houses all of an underwriter’s most valuable digital tools and supports the entire underwriting process from start to finish” (Artificial, 2022). Adopting a tailored workbench is beneficial because it provides a simple way that insurers can streamline workflows and reduce downtime for underwriters.

 

Insurance will continue to be considered essential

Despite the cost-of-living crisis, insurance will continue to be considered an essential product. While consumers will cut back on other expense areas, insurance for home, car and health amongst others is essential and will remain a steady source of income for investors in 2023 (Insurtech Digital, 2022). Additionally, customers are expected to opt for policies that are built around their exact needs, and at lower cost (Startups Magazine, 2022).