The economic downturn in 2020 significantly impacted individuals, businesses, and entire sectors. Although insurance is one of the most stable industries during economic disruption, it was not unaffected by last year’s events. Discover how the insurance industry is changing in 2021, and learn how InSource can help you adapt to new trends.
The insurance industry isn’t going anywhere—businesses and individuals need insurance to protect their assets, comply with regulations, and ensure financial safety during a disaster. However, the industry has to adapt constantly as new risks appear. In 2020, a combination of factors completely changed the insurance industry.
In 2021, the industry is continuing to shift. These are the market and technology trends shaping insurance’s trajectory this year.
Last year marked the end of a long period of “soft” market conditions. When the market is soft, insurance companies offer broad coverage to many people and businesses at a low cost. The insurance industry fluctuates between soft and hard markets regularly, and 2020 was the catalyst for a hardened market. Hard markets are categorized by:
- Higher premiums: Have you noticed your property, general liability, umbrella, and cyber insurance premiums rising? Were you shocked when you received a renewal quote for your employer-sponsored health insurance? You’re not the only one. Because of increased claims last year due to the coronavirus, rampant cyberattacks, wildfires, and civil unrest, many insurers increased premiums across the board.
- Restricted coverage: Many insurance companies are getting more restrictive with their underwriting guidelines, which means they’re dropping some current customers and rejecting new ones.
- Increased coverage exclusions: Insurance companies spend a lot of cash during the claims process. If they notice too many claims in one area, they often restrict coverage. For example, many insurers have chosen to exclude communicable disease coverage under their general liability policies due to the pandemic.
You can’t avoid the hardened market, but you can partner with InSource to find some of the most comprehensive coverage at a competitive price. We shop our clients’ coverage with different carriers to find great options for them, and we use our long-lasting carrier relationships to negotiate for better coverage and lower costs.
The insurance industry is currently experiencing a digital transformation. As insurance companies look for better ways to minimize risk and tailor products to consumers, they are increasingly turning to technology. These are some of the technology trends affecting the insurance industry in 2021:
- Use of consumer data to create customized products: Younger generations want insurance products that fit their needs and lifestyle. Insurance companies are using consumer data to learn what their policyholders and potential customers want. Instead of offering every customer the same product at the same price, many companies are using digital services to provide custom coverages and rates for specific individuals.
- Use of consumer data to calculate risk and adjust premiums: Insurance companies use risk calculations to determine their rates. To increase accuracy, many insurers are using extra data points from credit reports, social media profiles, mobile devices, smart watches, and other sources.
- Automating processes using artificial intelligence (AI): AI is everywhere, including the insurance industry. In 2021, many insurance companies are using AI to automate risk assessments, underwriting calculations, and claims management tasks.
- Adapting cloud-based software: Many insurance companies and agents are implementing more digital tools in 2021 than they did in the past. Instead of collecting physical signatures and paper applications, they are using cloud-based software to digitize these tasks.
- Implementing blockchain technology: Though most people associate blockchain technology with cryptocurrency, it is becoming a powerful tool for preventing cyber crime. Blockchain stores single data points in multiple places, which makes it more difficult for hackers to access. Insurance companies can use blockchain to send insurance policies and store confidential data.
Are you struggling to keep up with rising insurance premiums? Our InSource team members use their industry expertise and knowledge to find coverage options at competitive prices for our customers.
Advanced technology and hardened market conditions are transforming the insurance industry in 2021. As new factors impact insurance carriers, agents, and policyholders, it is essential to stay ahead of industry trends. Taking a proactive approach to policy changes can help reduce costs and minimize coverage gaps.
At InSource, we know how important it is to anticipate and adapt to insurance industry trends. For nearly 90 years, we have embraced change and used our industry experience to predict new market conditions. In 2021, we are using technology trends to our advantage and helping clients minimize the impact of a hardening market.
If you’re looking for an agent that will expertly guide you through the complicated world of insurance, InSource is here to help. Contact us today to learn more about how we help clients get the most affordable, comprehensive coverage in today’s market.