Latest insights from GlobalData;
As we enter 2023, record-high inflation and the consequent cost-of-living crisis will be the greatest challenge faced by the insurance industry according to industry experts, says GlobalData. The leading data and analytics company notes that as consumers are more squeezed than ever financially, insurers may need to be flexible and innovative in order to retain customers.
According to a GlobalData poll over a third of insurance industry insiders cited inflation as the standout challenge for 2023. It was significantly ahead of other key themes such as digitalization, climate change, regulation, COVID-19, cybercrime, and geopolitics.
GlobalData’s 2022 UK Insurance Consumer Survey found that across personal lines products, consumers are conducting more research at renewal but not necessarily switching more. This is likely due to Financial Conduct Authority reforms preventing insurers from offering new customers preferential rates, as well as insurers struggling to offer cheaper premiums while their own costs are rising.
This means insurers that offer some point of differentiation are likely to pick up more new business, as consumers are increasingly looking for any added value they can find. This could include increased flexibility such as the ability to switch cover on and off, only paying for exactly what they use (e.g. pay-per-mile), or even payment breaks (as was seen during the COVID-19 pandemic).
Carey-Evans concludes: “Overall, it will be difficult for insurers to make a profit from premiums and maintain penetration rates in the short term. It may be wise to take a long-term approach to try and keep existing customers happy and gain new ones by offering consumers more flexibility as financial difficulties increase at the start of 2023.”
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