Oh, the places your agency will go in 2023!
We’re looking ahead at what 2023 has in store for agents and brokers with insights from insurance pros.
From rising costs and inflation to finding promising new insurance talent amidst the Great Resignation, 2022 has certainly presented its own set of challenges for insurers. Though COVID restrictions were largely lifted, the effect the pandemic had on how customers purchase insurance and interact with their insurers, as well as how agencies themselves are run, has left many agencies scrambling to keep up.
It’s likely this evolution will only continue in the new year. Below, we’ll pinpoint five areas agents and brokers should keep an eye on in 2023, and the ways in which insurance professionals predict the industry will shift in the year ahead.
Talent
“Jobseekers will seek out careers specifically in ‘recession-proof’ industries. While there’s no such thing as a 100% recession-proof career, some industries offer greater job security than others amid the rising interest rates and inflation recently experienced. In 2023, we’ll see job seekers pivot to career opportunities in sectors, such as insurance, that remain resilient and essential in any economic storm. They’ll look to start franchises in industries that are most profitable, and insurance should be a top contender during their selection process.” – Mark Miller, COO at Goosehead Insurance
“Talent risks are causing strategic recalculations. For decades, we’ve discussed the risks associated with the declining availability of mainframe and COBOL skills. The addition of the Great Resignation, on top of demographically-driven declines in available talent, means that the risk to operations has been urgent and acute. Carriers are at a crossroads, which will likely make previously unpalatable technology modernization necessary.”- Mahesh Natarajan, head of insurance strategy at Cognizant
Shopping behavior
“Rising inflation rates are impacting consumers’ shopping behavior, leading to an increase in reshops, as people tighten their budgets. Goosehead is seeing higher non-renewals than ever before, triggering people to shop around for new policies. In fact, there’s been a 69% year over year increase with all reshops according to Goosehead.” – Brian Pattillo, vice president at Goosehead Insurance
ESG
“Entry-level ESG efforts for many carriers focused on green IT, recycling, and similar actions that benefited the environment and generated straightforward business value. Now, many insurers are entering the second-level effort—focusing on social impact and giving employees and customers a look into their purpose beyond revenue and balance sheets.” – Mahesh Natarajan, head of insurance strategy at Cognizant
Agency evolution
“All roads lead to independent agents. As the captive model loses its hold on the industry, and the direct model struggles to prove itself, market share is leaning towards the independent model. In 2023, not only will insurtech companies double down on independent distribution, but consumers will continue making the shift, with 49% now buying through an independent agent.” - Brian Pattillo, vice president at Goosehead Insurance
“Looking ahead to 2023, the “insurtech 2.0” landscape will continue to mature, with companies focusing more on profitability and honing in on areas with the biggest gap between customer needs and current capabilities. We see huge demand paired with limited supply; a result of relying on traditional questionnaire-based methods to gather data for underwriting. These methods have failed to appropriately quantify risk, leading to a chain reaction of underpricing, losses, and market pullback. An insurtech 2.0 approach will leverage the data and technology to properly assess and price risk, and even go beyond the insurance application to help proactively mitigate risk for policyholders.” – Madhu Tadikonda, CEO at Corvus Insurance
Data analytics
“Forward-thinking cyber underwriters are already using data analytics to inform their underwriting decisions. However, these tools and datasets must keep improving to keep pace with dynamic cyber risks. By enhancing risk selection through threat intelligence expertise and encouraging proactive policyholder engagement, underwriters and their teams can help policyholders mitigate cyber threats. The current challenge for cyber underwriters will continue in 2023: to stay ahead of cyber criminals looking to exploit their targets’ vulnerabilities. In order to be successful at risk mitigation, this challenge requires a multifaceted strategy with input from data scientists, cybersecurity experts, and breach response specialists.” – Mike Karbassi, chief underwriting officer at Corvus Insurance