We’re almost at the end of the first month of the year! Time flies! And as we look ahead to the remainder of the year, it’s clear that the insurance industry is facing both challenges and opportunities. There are many trends that are poised to shape the industry in the coming year.

In this blog post, we’ll take a closer look at the top trends and predictions for the insurance industry in 2023, and explore how they are likely to impact brokers, insurers, and policyholders alike:

  1. Move to cloud-native – Hybrid working and broking-on-the-move have been a growing trend for the last few years, and digital ways of working are now expected, if not demanded by both employees and clients. Brokers need the ability to service clients seamlessly from anywhere, at any time, with access to all the data they need about clients, contracts, and carriers. We’ll see this continued growth over the next few years, but especially in 2023.
  2. Personalised pricing – Recent studies suggests that there will be large household premium increases over the next 12 months, as every facet of claims has become more expensive. Many insurers are struggling with how to price risk accurately to continue creating healthy ratios. We expect, however, to see market leaders moving towards personalised offers and pricing, based on more intelligent application of complex data.
  3. Increased adoption of IoT – 2022 saw a growing number of InsurTechs, insurers, and policyholders reaping the benefits of IoT, from flood forecasting to vehicle parametrics, to building construction data and the real-time reporting of this data. This will lead to further adoption of IoT across insurers and business lines. We expect this to continue growing with innovative new products using technology not traditionally associated with insurance, e.g. weather data and construction data used to improve efficiency in claim processing. 
  4. Maximising the value of existing customers – With increasing competition, rising costs of doing business, and cash-strapped customers, agencies, brokers, and MGAs will invest more on optimising their existing customer base, for example by offering multiple policy packages, more tailored services or cross- or upselling via the use of comparative customer data.
  5. The war for data talent – To maximise the value of data, businesses need top data analysts. As a result, the salaries of these specialists are rising and the marketplace is becoming intensely competitive. This is especially true because of the parallel rise in demand for the same skillset in financial services, retail, entertainment, and pharmaceuticals. In 2023, more insurance businesses will be competing for this limited talent pool, meaning we should expect to see salary costs increasing further. They will also need access to the latest tools and technologies. The companies that win the war for talent are likely to be those that invest wisely.
  6. Continued MGA expansion – We will start to see more businesses move into the MGA space in 2023. This could be accomplished by strategic acquisitions based on product and line of business synergies. Start-up MGAs are driving most of the future trends in insurance, and many agencies and brokers will build this type of growth into their business plans sooner rather than later.
  7. Increased collaboration between insurers and InsurTechs – 2022 saw Aviva and Lemonade’s unlikely partnership. It is yet to be seen if this is the start of a big new trend in 2023. Our hope, however, is that this competition will inspire more brokers to digitalise and adopt cloud-native platforms so they can compete more effectively with better on-demand customer service.
  8. Embedded Insurance – 2023 will see the continued rise of embedded insurance in e-commerce, led by Amazon. The e-retailing giant’s recent UK partnerships offering a range of policies to small and medium-sized businesses, backed by three insurers, is likely to pave the way for others. How many SMEs will switch to buying insurance via Amazon? Will Apple or Google enter the market next? 
  9. Global geo-politics will remain challenging – With no sign of the Ukraine war coming to an end, a potential economic slowdown in China, rising energy costs and ballooning inflation rates in many countries, all of this is having a knock-on effect on insurance businesses and their clients. We anticipate more economic turmoil and rising prices in 2023, meaning brokers, MGAs and agencies will need to keep tight hold of expenses and look to optimise margins where they can. 
  10. Regulation and change management – On 9th December, the UK government unveiled a detailed plan to reform 30 financial services regulations – including Solvency II and others that impact directly on insurance businesses. What the impact of this will be is yet to be seen, but we can expect a lot of change and increased costs for the market. Businesses that prepare with access to fast, accessible reporting to the FCA through enhanced Management Information and better use of data will come out on top. 
  11. Acceleration of digital transformation programs to survive and thrive – The insurance industry continued to evolve in 2022, increasingly adopting new technologies. It looks like our industry is reaching an inflection point, and we will see a real transformation in 2023 as forward-thinking companies look to increase efficiencies, drive down costs, and prove their value with better use of data.

As we progress through 2023, the way in which brokers, MGAs, and agencies to stay ahead of these trends and adapt to the changing landscape of the insurance industry will be critical. The efficiencies and improvements that come with technological advancements should be a high priority for those wanting to continue to flourish in these challenging times. To see how Novidea can help, click here.