5 positive developments in the insurance industry
Evolving for the better: Agents and brokers should be well-versed in these issues to anticipate the industry's future.
The insurance industry has weathered a difficult time and has confronted recent obstacles ranging from an influx of new competitors to technological advancements and premium increases.
Inflation, high interest rates, shifts in consumer demand, skills gaps and climate change are just some of the issues with which the sector continues to grapple, and it looks like there is bound to be more of the same throughout 2023.
It’s no wonder many insurers have struggled to stay afloat. However, there are positive changes in the insurance industry that ought to be celebrated. Plenty of providers have proven their resilience and adaptability in the face of uncertainties. After all, the present is informed by the past — and the present will soon shape the future.
From technological advancements to higher costs of coverage, the way we view insurance is shifting. Companies are partnering with tech firms and altering their insurance offerings to keep up with the times.
But exactly how is the insurance industry changing/? How can diversity and hiring be improved?
Through the exploration of the following issues, agents and brokers can gain an understanding of the biggest changes in the insurance industry and what the future of insurance holds.
Finding fresh approaches to diversity and inclusion
As we continue to examine representation in the insurance industry, it is becoming increasingly clear that to create a level playing field, fresh approaches are more important than ever. Figures from 2021 show that only 30.5% of employees at the largest insurers were people of color. Similarly, only 4% of insurance employees identified as having a disability, compared to the national average of nearly 25%. In addition, though women hold the majority of lower-level roles at insurance companies (77.2%), they are disproportionately represented in executive-level jobs (33.5%) compared to men.
The industry is addressing these issues and striving for better representation. For instance, automated algorithms can be used to detect unconscious bias in hiring decisions and provide a far more even playing field for applicants of all backgrounds. Additionally, insurers can invest in creating talent pipelines involving partnerships with educational institutions and training programs that specifically target underrepresented groups. Finally, the industry can seek to promote greater career mobility and growth opportunities across all levels of organizations.
Changing the game with technology
In the past year, insurers have been tested in ways they never have before, including having to adjust their services to meet the expectations of policyholders. Although the process has presented a learning curve, it’s also resulted in some cutting-edge innovations for how technology is changing the insurance industry.
As new partnerships form, more efficient customer journeys are emerging for the first time. For example, well-known auto companies such as Ford and Tesla are creating insurance options specifically for their customers, and Volvo is collaborating with Allianz to develop an insurance ecosystem. This union will benefit both parties, as they can tap into each other’s established customer bases, expanding Allianz’s reach and creating insurance plans that align with the kinds of cars Volvo makes and its corporate ideals.
Growing partnerships
Any insurer wanting to expand in 2023 would do well to consider strategic partnerships, which are incredibly powerful tools for creating new products and opportunities. For example, insurtech business Hippo partnered with ADT and Handdii to offer customers improved security and repair services. Microsoft and Salesforce have formed similar connections with insurtech companies such as Bold Penguin and Snapsheet to build out their own insurance technology capabilities by creating comprehensive insurance ecosystem software.
Combating costs
The inflation rate in the U.S. has risen considerably in the last few years, and with it, the price of property and casualty insurance policies. Before the pandemic, the insurance business already had its fair share of profitability issues, and the sudden climb in inflation has only made them worse. Rising prices resulted in an additional $30 billion in loss costs in 2021 alone — over and above historic insurance industry trends. Every type of coverage is feeling the pinch from higher claim costs and other expenses. There doesn’t seem to be a quick fix for this issue, so carriers will need to adjust their pricing tactics and strengthen their operational stability for any situation that arises. It will be critical for C-level executives to get involved in this process.
Enhancing employee benefits
In an effort to attract more talent, insurers have begun to add more voluntary and flexible benefits to their plans to adjust to changed personal situations and individual needs during the pandemic. One of these offerings is pet insurance. After all, during the pandemic, close to 20% of American households got a pet cat or dog to cope with the stress, even though having a pet comes with a cost of anywhere between $500 to $1,000 yearly.
While not completely new, pet insurance is an option to cover some of these yearly expenses, but it is not a very common benefit that employers provide to their employees. Nevertheless, because almost 70% of American households have pets, businesses are beginning to realize the potential of pet insurance as an employee benefit to attract more talented workers.
A 2021 survey found that 47% of companies offered pet insurance benefits and 69% planned to do so in 2022 or the near future. With this increased demand, providers are leveraging their data and actuarial skills to customize pet insurance plans. Offering custom-designed plans on preexisting conditions will make it easier for consumers to safeguard their pets while also providing coverage against unexpected medical bills at competitive rates.
The insurance industry is changing rapidly in response to the post-pandemic economy. Insurers are adapting to the shifting needs of their customers and employees and striving for improved diversity and inclusion. As these changes become more widespread, insurers can be confident that they will reap the benefits of better customer experiences in the insurance industry, more satisfied employees, and greater long-term financial success.
Ann Dieleman is the executive director at the Professional Insurance Marketing Association (PIMA). Based in the Kansas City metropolitan area, she is an active member of the insurtech and fintech community and has more than 25 years of C-suite global experience leading corporate growth initiatives, developing people, and building teams.
These opinions are the author’s own.
See also: