What is the future of the insurance industry in 2023?
Insurance products will become reimagined in the cloud
Overall statutory performance in 2023 suffered from continued weak auto insurance performance and above-average catastrophe losses from a wide number of convective storm events, leading to a larger 2023 statutory underwriting loss relative to 2022, with a combined ratio projected at 103%, and an estimated 15% decrease ...
Insurers will engage in more process automation across marketing, distribution, underwriting, claiming, and policy servicing. Leading insurers will use automation and empathy during the next decade to reach outcomes such as driving revenues and policies in force, optimizing expenses, and minimizing risks.
The industry says it has become too expensive to operate in California, blaming the high cost of rebuilding, growing risk from natural disasters and increasing expenses from buying “reinsurance,” or insurance for their losses, which state law prohibits them from passing onto customers.
Allianz SE, China Life Insurance Co. Ltd. and Nippon Life Insurance Co. are the three largest life insurance companies in the world, according to a new ranking by S&P Global Market Intelligence.
Self-service for policyholders. The shift towards self-service in the insurance industry is already significantly shaping policyholder experiences in 2024. This change is driven by the growing demand for digital solutions that allow customers to manage their insurance policies with greater autonomy and convenience.
US demand for catastrophe reinsurance alone is expected to grow as much as 15% by 2024, putting further upward pressure on prices. Rising insurance rates have reverberated throughout the general economy. Commercial property premiums rose by an average of 20.4%—the first time that rates rose greater than 20% since 2001.
Claims costs are the largest source of losses for insurance companies, and they're rising quickly due to inflation. Insurers are also struggling with claims leakage—when insurers spend more than they should to settle a claim—which costs the industry $29 billion per year on auto policies alone.
| Car Insurance Provider | National Market Share | Overall Rating Out of 10.0* |
|---|---|---|
| 1. State Farm | 16.84% | 9.4 |
| 2. Geico | 14.05% | 9.1 |
| 3. Progressive | 13.76% | 9 |
| 4. Allstate | 10.69% | 8.8 |
You'll enjoy job security
During a recession, insurance is more stable than other fields. That's because no matter the economy, people and businesses always need protection from risks. Employment with an insurance company or an independent agency offers greater job security than other industries.
Why are people leaving the insurance industry?
Most people vacating their positions (regardless of the career) cited low pay, no growth opportunities, childcare problems, and feeling undervalued or disrespected at their workplace. Many struggled with not having enough flexibility with their work hours.
But the industry is in serious trouble. Climate disasters around the state, especially worsening wildfires, threaten the current business model and millions of middle-class Californians.
Artificial Intelligence
AI technologies learn and improve over time as they process more data. In insurance, AI can automate several processes and reduce the role of manual tasks.
| Ranking | Insurance Company Name | Domicile |
|---|---|---|
| 1 | UnitedHealth Group Incorporated (1) | United States |
| 2 | Centene Corporation (1) | United States |
| 3 | Elevance Health, Inc. | United States |
| 4 | Kaiser Foundation Group of Health Plans | United States |
Berkshire Hathaway was the largest insurance company in the United States in 2022, with total assets amounting to almost 950 billion U.S. dollars.
(Annuities are on the rise and are now a bigger moneymaker for life insurance companies than traditional life insurance). Revenues taken in from life insurance premiums are on the rise overall, up by more than 10% from 2020 to 2021.
- Embracing Digital Transformation. ...
- Cybersecurity Risks. ...
- Regulatory Compliance. ...
- Customer Expectations and Experience. ...
- Insurtech Disruption. ...
- Data Management and Analytics. ...
- Talent Acquisition and Retention. ...
- Changing Risk Landscape.
This is largely driven by the market continuing to reassess the impact of ever-increasing insured losses from major events, while also reacting to inflation and high interest rates. Given climate change and global economic factors we would expect this to continue into the foreseeable future.
Another key driver in auto insurance change is data, which has also caused some disruption. Driven by IoT and telematics data coming from autonomous vehicles, rideshare apps and more, the shift to “real-time” data and continuous underwriting has caused new leaders to emerge.
Extreme weather events, environmental concerns, the rapid rise of Artificial Intelligence (AI) and pressures from the economic climate are just some of the key challenges insurers will face in 2024, according to the latest edition of the Annual insurance review from international law firm RPC.
Is the insurance market hardening?
The hardening is evident to anyone who has shopped for personal vehicle insurance, which rose 17 percent in the first six months of this year, according to Insurify.com. Even more problematic is when coverage thins out, as it has in areas hit hard by climate change.
US P&C underwriting outlook
In the realm of underwriting, the industry is witnessing an increase in the combined ratio forecast for 2023, revised to 102%. The industry net combined ratio surged to 107.3% in Q2 2023, with natural catastrophes adding 11.8 percentage points, well above the 10-year average of 6.3%.
Executive Life Insurance Company (1991) - One of the largest life insurance companies in the US, it went bankrupt due to investment losses in junk bonds.
Some of the car insurance inflation in the US can be explained by a pause in premium increases during the pandemic and the widespread parts shortages that hobbled the entire auto industry. But much of the cost pressure for insurers is because vehicles have taken a high-tech turn.
| Company | Premiums in billions | Market share |
|---|---|---|
| State Farm | $46.7 | 16.8% |
| Progressive | $38.9 | 14.1% |
| Geico | $38.1 | 13.8% |
| Allstate | $29.6 | 10.7% |
