What the insurance industry needs in 2023 - Part 1
The pandemic introduced worries, momentum and challenges that were bigger than companies had dealt with before. The ability to recognize where we stand can no longer take months.
Editor’s Note: This 3-part series gives insight into current risk trends and strategy for how insurers can capitalize on all the modern tools available today to get ahead of the curve and ensure 2023 is a year of economic recovery for insurers and quality customer service for consumers. Part two of the series can be read here.
If you want to go fast, go alone. If you want to go far, go together.
This is a mantra our company continually emphasizes within our own four walls, but looking back on 2022, and, more importantly, looking ahead to 2023 and beyond, this is a message for the broader insurance market as well. Why? Because a key trend we’re seeing across the industry is more collaboration than ever before.
The pandemic introduced worries, momentum and challenges that were bigger than companies had dealt with previously. Commerce around the world changed overnight, and in order to respond in a broad way, insurers needed a view beyond what they could see within their own individual organizations.
Over the years, as the industry’s usage of data and analytics has matured, so has the need for a clearer view of real-time trends and relative performance within the industry. Even before pandemic conditions, market cycles began moving faster. Our ability to see and recognize where we stand cannot wait 8, 10 or 12 months.
No longer do insurers need just micro inputs from a data and analytics perspective — helping them make decisions about individual consumers and their households — they now also require data that defines the broader behaviors of the market and how consumers are reacting and adapting in aggregate. This is the conversation that is taking place as we speak. Because while insurers’ data is confidential, market trends are not.
Insights into changing market conditions, driving and shopping behavior, violation patterns and claims activity, to name just a few, have become invaluable in helping insurers navigate the evolving landscape of the insurance industry. In response, we continue investing in emerging capabilities to deliver the broader view, enabling us to consider collective exposure, the ability to align on the decisions, and the direction that will continue to transform the industry.
Looking ahead to 2023, we are prepared to continue to see movement in our traditional indicators that have long provided an understanding of market cycles. So much is in flux:
- How are macroeconomic factors impacting auto insurance and how do driving behaviors continue to change in the post-pandemic world?
- How is home ownership changing and how is climate change impacting the industry?
- How do we educate society on the benefits of data for insurance?
- Are insurers prepared to meet this evolving market?
The answer to each of these questions is essential to adjusting to the “new normal.” Before insurers can implement an effective strategy that will enable them to pivot with all the changes in trends, meaningful data must be gathered and interpreted so as to get a handle on and get ahead of new trends.
In part 2, we’ll examine in depth how collecting and sharing data from multiple sources strengthens an insurance company’s ability to anticipate new areas of risk and offer better, yet cost-effective products that take into account emerging economic and individual trends. We’ll also take a look at the key data points available to tech-savvy insurers, which will be the main drivers behind profitability moving forward.
Bill Madison is chief executive officer of the insurance segment of LexisNexis Risk Solutions. He is responsible for all auto, home, life and commercial insurance business including solutions for underwriting, claims, and analytics, for the U.S. and international markets. Contact him at Bill.madison@lexisnexisrisk.com. Opinions expressed are the author’s.
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