This post originally ran on Medium.com.
With the spread of COVID-19 across the world in 2020, the economy radically changed. Not only were incomes halted, but the result was the highest number of unemployed workers in the job market to date. With this came a huge shift in the needs of the average citizen, as well as their expectations.
The entire economy as a whole has been impacted. With a 1% decline in advanced markets, as well as an impact on employment and business activity, as well as trade. Despite these overall challenges, Deloitte predicts the insurance industry could rebound with 3% growth in 2021.
Because industries adopted in the wake of the pandemic, (such as restaurants creating outdoor dining spaces, the increase in remote workers, and drive through retail stores), some industries were able to maintain security. Specifically, insurance companies sprang into action, creating a virtual industry that will carry into 2021.
Here’s a look at the top trends to watch as we head into 2021.
The current economic uncertainty has made it incredibly difficult to prepare for the future. Insurers specifically must prepare for the challenging market conditions in 2021, which will be completely unprecedented.
Not only could the conditions include limited growth and higher premiums, but 2021 could also require a new sense of caution for insurers. Expect to see new coverage limits, as well as new terms and conditions to policies.
Higher rates are also an option when it comes to insurance trends in 2021 but, at the same time, you should expect to provide more value as well. Expect innovative products to be rolled out in order to retain customers and provide incredible service to compensate for any increase in rates.
Insuretch continues to drive efficiency
Insurance has always been a data-driven industry and, now with the rise of the tech industry, there is more data than ever before. This means that insurance agencies are able to use this data in order to propel business.
With more data comes the ability to create customized plans that are specifically tailored to each individual client, minimizing risk, and increase accuracy, for insurers. In the next year, insurers will be able to use even more data in risk assessments. Whether this is from the internet, social media, or even credit reports, real-time access to all of this data provides the opportunity to create policies at a better price.
Digital agency management systems, like CoverWallet for Agents, will continue to play a role in driving efficiency. These platforms will continue to increase the speed and ease of quoting and binding commercial policies.
With the pandemic sweeping across the nation, insurers were required to change the way that claims are handled. Rather than go on-site and examine things on the ground, remote claims handling has increased.
Even if the pandemic subsides in 2021, virtual claim interactions will continue to increase. Not only does this provide an alternative to unnecessary on-ground calls, but it will save insurance companies more money. When insurance companies save money, that trickles down into savings for the customer.
Virtual claims maintain safety and help to reduce the pressure of insurance agents physically going out to meet clients. It is a win-win situation for all involved.
Emerging regulatory challenges
Not only was the pandemic unprecedented but there has not been enough knowledge surrounding it to fully understand the long-term impacts on society. With new information emerging almost daily, regulations could continue to change as well.
Policy disputes over infectious disease-related coverage, along with disputes over sales and claims could cause challenges for insurers in 2021.
As we move into 2021, cybersecurity tops the list of what is expected to see an increase in investment. This is most likely in part by the fact that employees are working remotely, so data is moving in ways that are different from the traditional security area. This facilitates the opportunity for cyber-related risks, meaning that insurers have been implementing stricter verification requirements.
Although cybersecurity has always been an important part of IT, in 2021 it is expected that companies will pour money into this part of the budget. Cybersecurity teams will continue to exert more control over user devices and demand higher security due to work from home situations.
As we move forward into 2021
There are many challenges that insurers will face as we move into 2021. With stacks of unresolved disputes over pandemic-related business interruption, many businesses will seek out new solutions for affordable coverage. There is also a fear that the virus could mutate and create even more issues for insurers in the future.
This is why being aware of the industry trends for the next year is essential. How insurers respond to the pandemic will show new innovation in every aspect of insurance including sales, policies, and customer experience. We can expect 2021 to be the year where everything continues to change for this industry.