4 insurance industry trends to watch

In this third calendar year marked by the pandemic, emerging trends in data collection and security require insurance policy offerings to keep pace with client needs.

We can count on innovation and technology to keep reshaping the insurance sector in 2022 and beyond, and for insurers to help policyholders meet the moment by minimizing risk.

Here are four trends to watch.

• Pent-up demand for tech projects will be released. Businesses pivoted to remote work in 2020, requiring huge tech investments to enable virtual productivity. The pandemic led to a halting of many projects to deploy new insurance technology tools so that support teams could assist remote workers. Look for pent-up demand for those projects to be released this year. A mid-2021 Deloitte survey of insurance industry financial executives found tech investments are a top priority, with nearly 70% planning to increase spending on data analytics capabilities and more than 60% looking at customer-experience tech upgrades.

• Products will evolve to reflect changes in policyholders’ lives. Many policyholders traded long commutes for a short walk down the hall from their kitchens. Others bought and sold homes, added rooms, or moved to – or away from – cities. And during the Great Resignation, some decided to change professions or take breaks to travel. Such lifestyle changes give insurers an opportunity to connect with customers and assess their evolving needs. New or upgraded vehicles or homes will need protection. People who’ve stored possessions to travel freely may need different kinds of policies, including insurance on belongings in storage units. Insurance products may need to evolve to keep up.

• Insurers will continue to collect data — and seek permission to use it. Digital privacy legislation being contemplated in Canada and elsewhere will create the need for insurers to obtain policyholder consent for data use, including permission to contact customers. When policyholders agree to share data in exchange for value, they are in essence agreeing to let the insurer become a part of their lives on a deeper level. That’s an enormous opportunity to upgrade the customer experience, making every communication touchpoint more personalized and responsive to customer needs. More insurers will make it a priority to collect data and get permission to use it for outreach and analysis.

• Business concerns about cybersecurity will increase. Insurers can expect growing interest from businesses, including smaller companies, looking to mitigate risks associated with data breaches. With more small business customers buying products and services online and remote workers handling sensitive data, vulnerability is higher than ever. A recent Insurance Bureau of Canada survey found costs associated with cyberattacks grew in 2021, with 41% reporting the expense exceeded $100,000. About a quarter said they plan to buy policies to reduce risks in the coming year. Insurers should prepare for greater demand as businesses of all sizes look for ways to reduce their vulnerabilities.

Tara Kelly is president, CEO and founder of SPLICE Software, with offices in Calgary and Chicago. This article is excerpted from one that appeared in the April issue of Canadian Underwriter. Feature photo courtesy of iStock.com/simarik