OK, firstly thanks to everyone who has provided industry comment for this series of three – yep count `em – three Predictions 2024 features. The original plan was to have two on Insurtech/platforms/data etec and another on general trends. But the feedback has been so good it’s opened up the possibility of adding a second general market trends article.
So let’s get into the first Predictions 2024 roundtable, which looks at General Market and Global Trends next year.
Property damage and how insurers cope with catastrophes or extreme weather event is going to be important, says Reijo Pold, Founder & Chief Strategy Officer at Value.Space:
“In 2022 Europe experienced droughts that led to a surge in subsidence-related property damage claims. In France, the cost of claims is expected to total €43bn between 2020- 2050. 2023 will be the hottest year on Earth since records began, with trends set to continue in years to follow, making it very likely that the frequency and severity of losses will continue to accelerate.
Concurrently, the world becomes more reliant on mined resources. 16,000 active tailings storage facilities are needed to service global mining waste deposits, and experts at the WMTF are predicting 13 catastrophic TSF failures costing $32.5bn between 2025-2029.
Most of the world’s critical infrastructure was not designed with the effects of climate change in mind, so standard modelling tools used by insurers have not enabled them to achieve the necessary scale and regularity of monitoring for these assets with land-based solutions.
In 2024 insurers will need to rely on more capable solutions like satellite-based risk assessments that allow public infrastructure owners/managers to have an almost real-time view of any existing or developing structural risks. Having access to more data that provides up-to-date deformation surveys of assets and areas is going to be critical for reducing financial losses and protecting the critical infrastructure that supports our livelihood.”
Meanwhile Graeme Fitzpatrick, Operations Director at Woodgate & Clark also sees global weather patterns causing challenges for insurers:
“According to scientists, the cyclical El Niño effect will continue to exacerbate and interfere with weather patterns in 2024. The insurance community has worked hard to strengthen its resilience to surge events and those efforts will undoubtedly continue. Certainly at Woodgate & Clark, we have set in place a series of measures to ensure we can deploy the experience and expertise that matters when a surge event occurs. This comes down to the fact that we give people hands on experience from day one with opportunities to learn from their peers and have mentors that can guide them in their careers. Career paths are mapped and adjuster development programmes designed to deliver continuous improvement in skills.
A key element in this approach for Woodgate & Clark is our Major Loss Pathway where adjusters gain exposure to larger losses and other more complex case work, initially under the guidance of a more experienced adjuster. We’re planning our first graduation ceremony in 2024
ESG will be top of the agenda in 2024 as businesses examine how they can ‘do the right thing’ in every aspect of their operations, demonstrating they are responsible, sustainable and forward thinking. An important part of this for loss adjusting in property insurance is how we can introduce low carbon materials in some building repairs. This is an ongoing conversation for the sector as a whole as we tackle the potential issue of ‘betterment’, as highlighted in a recent article for Insurance Edge.
Finally, we will see more and more examples of where technology and human expertise are combined to automate and expedite processes that previously required more people hours and more travel. A great example is the Quadrassist Desktop Adjuster service which can currently handle low value property claims for insurance providers. By utilising the knowledge of our team of building surveyors we can make swift assessment of claims from the desktop and reach cash settlement the same day in some cases, thereby reducing emissions from travel, while also cutting costs and expediting the process for all parties.”
AUTOMATED SYSTEMS
One longer term trend across the insurance industry is automated systems, the adoption of which was speeded up via Covid19 in many markets. Tim Hood, VP of EMEA and APAC for Hyland sees more scope for streamlining claims in the future;
“With increasing customer expectations, expanding digital adoption and the potential for fraud, data will continue to play a key role for insurers in 2024 — especially when it comes to claims.
For policyholders, claims is the moment of truth when they evaluate how well they are being supported by their insurance carrier. Processing a claim with speed and accuracy is critical for today’s insurers but requires the right data. From first notice of loss (FNOL) all the way through to settlement, intelligent automation is technology that can assist insurers to simplify and speed up the claims process.
At Hyland, our customers have benefitted from improved efficiency and data accuracy by deploying process automation tools like intelligent document processing, workflow and robotic process automation (RPA). Intelligent automation technology can quickly extract pertinent details from various documents and different sources, spot potential errors and integrate data into processing systems.
While intelligent automation has been transforming the insurance industry in a number of ways, considering recent advances in AI, I expect more insurers will plan to lean on it when it comes to data management and claims handling.”
CLAIMS INFLATION
Solutions on claims do need to be looked at next year, as the increase in the costs of processing motor claims has had a knock-on effect on pricing this year. Andrew Bart, CEO, International Operations, Crawford & Company, looks at the problem of claims inflation and how to solve it.
“Despite some stability in factors contributing to claims inflation, costs will continue to come under upward pressure in 2024. Material costs continue to rise, while the cost and availability of labour across Europe remains an accelerant. Growing geopolitical instability will also amplify supply disruption and availability challenges, while Brexit and COVID-19 are still having an impact.
The adjuster-enabling effects of technology will become increasingly prominent in the claims environment. With self-service capabilities delivering more up-front data earlier in the lifecycle, this will further speed-up decision making and reduce resolution times. Claims portals are already reducing periods from days to minutes and will become a more prominent component of claims response capabilities.
This will be facilitated by the more effective application of AI and machine learning tools. Such technologies are already supporting speedier claims triage, but the ability to learn and adapt faster to evolving client needs is helping fast-track platforms able to anticipate and provide greater optionality around customer requirements.
2024 will see a doubling down on investment in talent to address the skills shortage. The focus will not only be on new and existing talent, but also on retaining latter-stage-career talent. That means offering the flexibility for experienced adjusters to play critical roles in the development of critical next-generation talent.”
SOLLERS REPORT
If you want a general overview on all things Lloyd’s Blueprint, AI, reinsurance risks ansd more, then Sollers produce an annual report.
High reinsurance costs and the ongoing impact of claims inflation will force insurers to redefine their business models, underlines the Sollers Prediction Report 2024. Companies will increase their efforts in process automation. To prepare for that, the implementation of cloud-based solutions and the development of data management will be a major focus in insurance next year.
Insurance companies will have to deal with the impact of claims inflation for the second year in a row, underlines the Sollers Prediction Report 2024 “Against the Wind”. Unusual weather patterns and an increased dependency on reinsurance will add to the financial pressure as reinsurance costs remain elevated. To respond to that, operational efficiency will become important. As the industry prepares for the use of Artificial Intelligence, companies will focus on data management and cloud. EU legislation and the London Market modernisation through Blueprint II will support data-driven business models.
“Artificial intelligence is about to fundamentally change the insurance business. But to utilise it, insurers need to invest in their IT infrastructure”, says Niels Zijderveld, Chief Sales Officer at Sollers Consulting. “Insurance companies will expand their strategies to reduce claims costs and focus on cost-efficient models through automated distribution and underwriting.”
“The cloud will play a dominant role in IT projects to achieve a higher degree of automation”, comments Aleksander Czarnołęski, Senior Consultant at Sollers. “UK insurers will move to the cloud to prepare for innovation and, as a result, will be able to offer cost-effective customer services.”
2024 will be characterised by intense activities of Lloyd’s syndicates and London Market insurers to adopt Blueprint II, with application programming interfaces playing a pivotal role. Lloyd’s and London market insurers are set to adjust their data models and communications systems to the requirements of the Core Data Record set through Blueprint II.
“There is a strong trend towards integrated underwriting solutions that enable insurers in the London Market to rationalise underwriting and process data more efficiently”, comments Jakub Wróblewski, UK London Market Lead. “Underwriting Workbenches that help to integrate various data sources are expected to become more popular.”
Next year, many markets will be characterised by a growing regulatory and political influence on insurance as elections will be held in the US and most probably in the UK. The EU is likely to speed up its efforts to create legal frameworks for data usage and artificial intelligence. These will have a direct impact on the insurance industry. The Sollers Prediction Report is based on economic data and talks with insurance industry executives and professionals in 15 markets across Europe, America and Asia-Pacific.
The Sollers Prediction Report 2024 “Against the Wind” can be downloaded here: https://sollers.eu/insights/insurance-industry-trends-2024/
PAYMENTS WILL GET SMOOTHER
“A primary focus for insurance providers in 2024 should be to deliver simplified and streamlined payment processes to suit all policyholders. Consumers crave convenience, and those insurers who can deliver secure, flexible payment options will benefit from a reduction in failed payments, greater customer relations and maximised lifetime value.
Our own research shows that while Gen-Z customers prefer digital payment methods, such as mobile wallet and contactless payments, older generations continue to lean towards speaking to someone in-person, either paying over the phone or via more traditional methods of payment. As more Gen-Z consumers reach the stage of managing their own insurance policies, demand for flexibility will continue to grow. As the economic outlook for 2024 will likely remain unforgiving, people-focused payment experiences will be highly sought-after – with a diverse payment options portfolio no longer a “nice to have”, but a necessity for insurers wanting to remain competitive.”
TRUST ISSUES
Insurance is all about trust, and 2024 could see some bridge-building work being done, says Daniel Derham, Insurance Specialist, SAS UK & Ireland.“Following a turbulent year for the insurance industry – fuelled by geopolitical issues and macro economic factors – there are several key areas for insurers to address in 2024, as they adapt to new realities.“The first is the widening gap of trust in the insurance industry, with a survey from last year affirming the widespread dissatisfaction in the global insurance industry. This has been an issue since the pandemic, where there were instances of people’s risk going down, but their premiums going up. The customer demand is for more accurate premiums – which tech like AI-powered analytics will enable.“This ties in to the need for insurers to understand how to most effectively use AI in their operations. AI has a huge role in improving the customer experience, with the insights it generates about customers enabling more personalised product offerings – facilitating the long overdue transition of an industry which isn’t built on predefined packages of coverage, but customers’ genuine needs.“Automation will have an increasingly-important role to play here. It’s already alleviating the need for customers to initiate a lengthy claims process, for example, through registering when a flight has been cancelled and initiating action.“AI is also helping to predict risk in a far better way, providing accurate insights on severity and likelihood – invaluable when approaching growing issues like climate risk. Insurers can then take a proactive approach, such as sending out advice to those in areas prone to flooding – ultimately mitigating loss.“In 2024, many insurers will also be making decisions on how to approach the rising trend of embedded insurance. We’re seeing it become more of a concern in the industry, as a one-step removed model which risks traditional insurers losing customer engagement.“The solution must lie in better servicing your customer, with those who take the leap and invest in new technology set to reap the benefits long-term.”
CUSTOMER SERVICE PROCESSING AND ESG
Meanwhile Rob Paisley, Director, Banking, Financial Services and Insurance, SS&C Blue Prism has thoughts on modernising claims systems and more regs on ESG compliance across the supply chain.
Clients are demanding more personalised experiences for customer service and claims processing. They want to be able to submit automatic claims from the mobile app. But usually, behind the scenes, everything is still highly manual, with paper faxes and emails from brokers, and coffee stains on submissions. The deluge of self-service requests has heightened the urgency for automation. Having too many human touches delays processing time and hurts margins. Straight-through processing is the goal, but they also have to protect themselves from fraud. In 2024, I think you will see a lot of technology aimed at understanding the context of documents for both routing within an organisation but also to predict potential risk.
‘For ESG, it’s about whether you want to do business with an entity based on their reputation. As central bodies get stricter with regulations on data, it comes down to if you can trust third parties with your data. If I sub-out my business in certain markets to specialty brokers or other insurance companies, the parent company holding the policy is still responsible for things like data breaches. We’ll see a lot of oversight and automated monitoring to help protect and police those third-party broker-dealers.’
Hope you enjoyed these insights. IE will be publishing two more Predictions 2024 features this week, so check back for more. Or feel free to add a comment below.
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