Insurtech firm Novidea has published a list of three key trends which it says will affect the insurance industry in 2022. The trends include increasing consolidation and digitisation as the market becomes more competitive.
Growing numbers of mergers and acquisitions
Novidea predicts that the number of mergers and acquisition (M&A) deals among insurance agents and brokers will continue to rise due to increasing competitive pressures, continuing longer-term trends that have been seen in previous years.
M&A deals among US-based agencies surged by 20 per cent year-on-year in 2020, with deals subsequently reaching the highest levels on record in the first half of 2021, due to deals driven by private equity-backed buyers.
Novidea says that it sees no signs of this trend slowing, with competitive pressures now higher than ever. It forecasts even higher numbers of M&A deals in the US, UK and global markets throughout this year.
Increasing consumer demand for digital services
Following mass public adoption of digital services due to the coronavirus pandemic, Novidea says that the last couple of years have accelerated customer expectations for ‘seamless and personalised digital interactions.’ The company says that 82 per cent of customers now expect multi-channel interactions with insurance providers to be standard.
To meet demand, many firms have developed self-service digital portals through which customers can manage their accounts, buy products and handle claims – a trend which Novidea says will further intensify in 2022.
Hybrid working will continue to become the standard for many firms
Novidea also predicts that the adoption of hybrid working will continue into 2022, saying that ‘the experience of repeated lockdowns since 2020 has proved the effectiveness of remote working.’ This includes attempts by brokers to enable 24/7 staff access to data, to carry out work, including e-trading, from anywhere.
Novidea cites Accenture’s Future of Work Study 2021, which found that 82 per cent of global workers surveyed said that they prefer a hybrid model where they can remote work at least 25 per cent of the time. The same survey found that 63 per cent of high-revenue growth companies have enabled hybrid models where their workforces can work from anywhere.
However, the firm says that some firms remain concerned that home working momentum will be maintained, and are looking for service level agreement (SLA) tracking and performance analytics to enforce a high standard of productivity in their staff.
Moving away from legacy markets - towards cloud-based platforms
“With these trends driving further digitalisation of the insurance market, we are seeing an increasing move away from legacy systems and towards cloud-based insurance platforms,” said Roi Agababa, CEO of Novidea. “Cloud-based platforms allow secure 24/7 access to data from any location to facilitate broking on the move. They are also essential for powering the kind of self-service platforms that brokers, agents, and managing general agents increasingly seek to develop.
“At the same time, full end-to-end cloud-based platforms help to fuel successful mergers and acquisitions, making it simpler to integrate disparate businesses, provide reporting and transparency and reach a positive return on investment much faster,” he added.