Top five trends in insurance industry in 2022

Seizing growth opportunities through digital

Following a challenging 2021, the outlook for economic growth is uneven – but there may still be positive signs for insurers.

The COVID-19 pandemic drove customer intention to purchase insurance by 7%¹, and forecasts state that global insurance demand is set to grow even faster than its long-term trend rate in 2022 and 2023².

But how do insurers take advantage of this growth potential? We believe by embracing the trends that are likely to come in the next 12 months.

These trends will be driven by digital technology, including AI and cybersecurity, and we’ll see the continuation of digital transformation for a better all-round experience, albeit with new focal points that are crucial to the way insurance companies will do business and retain customers.

This new phase of transformation is where we begin our look at the five trends to be aware of in 2022.

“For insurers, digital transformation is accelerating into a new era. We’re already seeing the digital transformation of claims and the payments process. Insurers must adapt in tandem with wider changes within the insurance industry, society and technology. Whether it’s purchasing a policy or paying out a claim, providers must focus on ways to keep innovating, become more efficient, and exceed customer expectations every step of the way.”

1. The evolution of digital transformation

Policyholders’ spend on technology and IT services is predicted to be $255bn (£187bn) by 2022 globally³.

It’s an example of how digital transformation is accelerating. As a result, new capabilities are likely to be developed at every customer touchpoint, including in areas such as claims and payments, as a way of differentiating a service from rivals.

That’s not all. Digital transformation is also likely to impact customer experience in 2022. And to win the hearts and minds of new potential policyholders, providers may need to focus on ways to keep innovating, become more efficient, and exceed customer expectations every step of the way.

Brokers will have their part to play in this, too. Digital transformation is not new. But as the proliferation of digitized insurance services spreads more widely throughout the industry, the value of brokers gaining confidence in the use of developing technology also appears likely to improve. They’ll need to maintain and continue to gain that confidence in 2022 to give policyholders the service they expect.

2. Automation

The implementation of intelligent automation in insurance can provide quick, effective results and offer room to scale in the future.

Robotic process automation can be applied to a variety of different insurance-related operations. Potentially, it can be used across claims management, payments, policy management, regulatory compliance and underwriting.

For example, thanks to the implementation of smart underwriting and automated processing, one leading insurer in Asia achieved automation rates of 99% for policies underwriting and more than 95% for claims settlement⁴.

This focus on technology has seen the insurance industry grow a customer base of more than 400 million, many of whom are young people who may be taking out their first insurance policy⁴.

Automation isn’t just a path to growth, however. It’s an excellent way to streamline business operations – increasing productivity while also achieving overall cost savings.

3. AI

AI is becoming more deeply integrated into the insurance industry and, together with other trends listed here, is going to further transform processes such as underwriting, pricing and claims.

It’s also one of the areas where industry employees are furthering their knowledge and developing the skills they require, giving AI the potential to enhance decision making and productivity, lower costs, and optimize the customer experience.

AI can be used as an important tool in the fight against insurance fraud, too. In fact, fraud detection may be an ideal use case for machine learning, which is particularly important given the volume of fraudulent claims that insurers have been seeing.

For instance, U.K. insurance claims tainted with fraud grew by 10% in 2020 during the height of the pandemic⁵. AI can help to combat this by rejecting transactions, highlighting them for further investigation or rating the likelihood of fraud.

It’s worth noting that most AI technologies will perform best when they have a high volume of data from a variety of sources. So, insurers might wish to work with payment companies to help fight fraud, as they can pool their experience and use relevant data to give AI even more potential.

As the economy and financial systems become more digitized, cyberthreats – and the security measures needed to counter them – are growing.

Cybersecurity is a particularly vital issue in insurance. Outside the health sector, the financial sector has had the largest share of cyberevents classified as COVID-19-related in recent months⁶.

An example is phishing attacks that have used the uncertainty around COVID-19 to entice users to open fraudulent attachments or grant attackers access to networks. Insurers may have been especially affected, together with payment firms and credit unions, as they hold a lot of valuable information – including payment information – of their policyholders that needs protecting⁷.

Mitigation measures can include tokenization, which helps secure transactions, minimize fraud and reduce the risk of theft of stored cardholder data for merchants.

Zero-trust principles, risk management strategies, development of enhanced controls and endpoint technology, and training can also be effective in managing cyberthreats. Together, they can limit the opportunities available to hackers, and help prevent costly fines and downtime.

It’s an issue that’s not going to go away in 2022 – the key is for insurers to be prepared.

In an age where customers expect everything to be available at the click of a button, the insurance industry has begun shifting to a consumer-centric model focusing on CX.

The evidence can be seen in the fact that 85% of insurers use CX initiatives throughout the customer journey, and 90% have a C-suite position dedicated to the consumer experience, such as a Chief CX or Chief Customer Officer (CCO)⁸.

Focusing on the customer is the driving force behind other trends we have examined here – streamlined processes through automation being just one example.

At the same time, insurers may also wish to consider maintaining options for more “personal” engagement. The human element and strong personalized service may be a deciding factor for some customers, so offering these services as required still matters.

And it’s just as important to remember that the insurance market isn’t standing still. New tech is constantly emerging. To address this change, insurers can offer policyholders new product lines to meet their ever-changing needs This can mean greater customer retention – giving insurers more time and funds to innovate.

Take transformation strides

Digital will be at the heart of insurance trends for 2022, and there is real potential for insurers to take great strides as digital transformation offers new ways to develop aspects of the insurance process.

Secure, automated and integrated payment systems will be part of that – enhancing customer experience and smoothing the customer journey in everything from policy purchases to claims payouts.

At Worldpay, we’re here to help. Speak to us today to learn more about our payment solutions for insurance providers.

[References]

^{1, 3} Capgemini (2021) World InsureTech Report 2021 [Accessed 26/11/21]
https://www.capgemini.com/gb-en/news/world-insurtech-report-2021-unprecendeted-access-to-capital-investment-fuels-insurtech-and-bigtech-maturity-and-customer-adoption/

² Swiss Re Institute (2021) In 5 charts: positive insurance outlook but economic risks loom [Accessed 26/11/21] https://www.swissre.com/institute/research/sigma-research/sigma-2021-05/sigma-5-in-5-charts.html

⁴LinkedIn (2020) ZhongAn: A look at the most disruptive insurance company in China [Accessed 26/11/21]
https://www.linkedin.com/pulse/zhogan-look-most-disruptive-insurance-company-china-ballivian/

⁵ Aviva (2021) Organised gangs and chancers drive up insurance fraud detection rates by 10% [Accessed 01/12/21]
https://www.aviva.com/newsroom/news-releases/2021/06/organised-gangs-and-chancers-drive-up-insurance-fraud-detection-rates-by-10-percent/

⁶ BIS Bulletin (2021) COVID-19 and cyber risk in the financial sector
https://www.bis.org/publ/bisbull37.pdf

⁷ BAE Systems (2021) COVID-19 and Insurance Fraud: Lessons Learned from 2020 and Beyond
https://www.baesystems.com/en-financialservices/insights/insurance-insights-covid-19-and-insurance-fraud

⁸ IBM (2021) Four ways insurance companies are improving their customer experience [Accessed 26/11/21]
https://www.ibm.com/blogs/services/2021/05/18/four-ways-insurance-companies-are-improving-their-customer-experience/