Insurance industry ranked 4th in new business applications growth
Investments in technological and operational efficiencies adopted during the pandemic attracted entrepreneurs to the insurance industry.
While many industries experienced a drop in new business growth in 2021, the insurance sector experienced significant improvement. According to the annual State of Swyft Industry Report, after ranking 18th in growth in 2020, the insurance industry saw a 24.37% increase in year-over-year applications.
The industry report conducted by Swyft Filings examines data from new business applications filed across the U.S. The 2021 report found that the insurance industry ranked fourth in growth out of all major industry sectors.
We can credit several reasons for the increase in insurance business filings. Among the primary drivers was investments in technological and operational efficiencies insurance companies adopted to survive the pandemic.
Due to insurance providers scrambling to become more technologically agile in 2020, companies embraced more flexible, efficient and customer-centric operations in 2021. These capabilities and the successes they ushered in likely encouraged new business formations.
Technology to the rescue
In response to social distancing measures and closures required by the pandemic, nearly overnight, insurance companies accelerated automating, digitizing and virtualizing operations, including customer service.
According to a survey of senior U.S. insurance financial executives by Deloitte, 52% of respondents trimmed discretionary spending in 2021, while 96% accelerated initiatives focused on digital transformation during that time. Riding what was once the future wave that became the present, insurance companies began focusing heavily on enhancing efficiency and improving customer experience. These initiatives show no signs of slowing down.
Thanks to the increasing ability to harness the power of digital and virtual operations, those seeking to open a business in the insurance industry could see their way to do so in 2021. These abilities came with more robust analytics designed to enhance current operations and inform future decisions. This gave potential business owners even more incentive to enter the insurance field.
Trends in tech shaping insurance
A host of tech trends are rapidly shaping the insurance industry and will continue to do so. These include applied artificial intelligence (AI), cloud storage, trust architecture and automation. While each of these trends is powerful in its own right, their combined use can result in an insurance company experiencing enhanced production, operations and customer service.
New insurance companies have an advantage over established businesses. They can set up shop with these powerful forces from the inception, making the insurance industry even more enticing to newcomers. When running marketing analyses and feasibility studies, potential business owners can factor in the many powerful digital tools at their disposal for opening a successful business.
AI is one area that insurance companies are exploring more frequently and successfully. Newly formed insurance companies are likely to rely heavily on applied AI. This technology is poised to disrupt many areas in insurance, including distribution, claims, and underwriting.
When this occurs, increased productivity and more impactful customer touchpoints result. Insurance carriers can quickly and easily access claims histories and distributions with continued extensive use. Taking things a step further, insurance companies can gather the information from customer interactions and use it to create new products and services.
Another trend affecting the insurance industry and the formation of new businesses is cloud storage. More and more insurance company systems are shifting to the cloud, which enables insurers to be nimbler in their approach to customer service and launch new products. A company entering the industry at this time can use cloud storage to develop exponentially and quickly establish a foothold in the insurance ecosystem.
Given increased data breaches and the resulting loss of sensitive customer information, it’s vital that insurance companies also build customer trust in data storage and security. Investments in cybersecurity will continue to be a top priority for the insurance industry, along with customer transparency in this area.
Newly formed companies that start with a clean slate, including rigid security protocols from the beginning, will ensure that customer data remains secure. Those companies that put data security first will bolster trust in their business and the insurance sector.
New predictions for insurance growth in 2022
This increase in new business formations in 2021 signifies even more industry success. With fast and forward technology firmly in place and agility in adopting new and better digital growth initiatives, more and more insurance companies will form moving forward.
The Deloitte study found that the key to increased growth and stability of the insurance industry relies on striking a balance between automation and human interaction with customers. While automated responses via chatbots, for example, are relevant when used to move a customer through a multilayer process, at the end of the day, most people will prefer a human touch at some point. This will generally be later in the process — for instance, during underwriting.
Those new insurance companies that understand these trends in customer service are poised to master this delicate balance and, as a result, will enjoy success from the start.
Alan Godfrey is the CEO of Swyft Filings, an online business incorporation and compliance provider based in Houston, Texas. Since its founding in 2015, Swyft Filings has helped more than 200,000 entrepreneurs start and grow their new businesses.”
Opinions expressed here are the author’s own.
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