Looking back on the year that was, one may argue that 2021 has had just as much of a disruptive effect as the storm that was 2020, especially with the recent discovery of the new Omicron Covid variant.  This means that we are still learning how to navigate a new hybrid economy where consumer trends remain unpredictable, and where technology is tantamount to future success.

The past year has proven that the insurance industry has risen to the challenge of adapting with the times, but we still have a long way to go before we shake off the old stigma of operating under a cumbersome and inflexible model. Bearing that in mind, I’ve identified some of the most relevant trends that will shape the insurance industry in 2022 and well beyond.

Greater need for improved customer experience, especially as the dual pricing ban comes into effect

The Financial Conduct Authority (FCA) will officially enforce its dual pricing ban at the start of 2022. This move undoubtedly benefits customers who will benefit from fairer and more equitable pricing based on their risk profile, not on whether they are a new customer or not.

Although the potential short-term implication could be an increase in new policy prices, the longer-term benefit will be more transparent pricing that is not punitive towards long-standing policy holders. It may even lay the foundations for a future where insurers can reward loyal customers with more competitive rates – within the context of their risk profile.

This means many insurers will move away from a purely cost-saving model, as insurance is complex and ease of doing business is becoming increasingly important. Priority will need to be placed on giving customers a greater understanding of what they are (and perhaps more importantly, are not) covered for through product transparency, simplified policy language and an enhanced user journey.

Teamwork is dreamwork

A constantly-improving customer journey is essential to the success of any insurer, and a highly-effective way to achieve this is through collaborative partnerships, which have steadily increased in 2021. And for good reason too – they feed innovation and creativity.

A good case in point is the ongoing collaboration between insurtechs and traditional insurers. Together they make the perfect team. Insurtechs, which provide fully-digital usage-based insurance (UBI) products such as temporary car insurance, boast agile and flexible technology to create bespoke digital products for the new generation of consumer that large insurers cannot cater to alone.

On the other hand, insurtechs can also benefit substantially by partnering with a widened portfolio of well-established underwriting partners, as this enables them to expand their coverage options and acceptance criteria, while ensuring that they offer their customers a comprehensive choice of the most competitively-priced policies in the market.

Adding value cross-industry

There is also an increasing trend in cross pollination between industries to better serve mutual customers. For example, enhancing an existing motor policy offering by partnering with a recovery service provider to add breakdown cover as an option for additional peace-of-mind.

Another example is in the automotive retail sector, where we continue to witness the astronomical rise of digital car dealerships and their ongoing collaboration with insurtechs, where temporary driveaway insurance policies are offered as part of the purchase experience.

This dramatically simplifies the process of how insurance is purchased and consumed as dealerships are able to offer customers a fixed-price insurance solution that is more transparent and user-friendly, thereby creating a more positive experience of getting a newly-purchased car insured.

Demand for easier customer journey leads to a rise in ‘ghost brokers’

While the industry is working hard to make insurance policies quickly and easily accessible at a competitive rate, this has led to a rise in bogus online car insurance deals, known as ‘ghost broking’. In fact, the Insurance Fraud Bureau (IFB) received over 21,000 reports of fraudulent motor insurance policies in the past 12 months which could be linked to ghost broking.

According to the IFB, its percentage of investigations into ghost broking have doubled in recent years, warning that tens of thousands of motorists could unwittingly be driving with fraudulent cover and will face serious consequences if caught by the police.

We can only rid our industry of the scourge of predatory fraudsters by working together to educate potential customers on the perils of unrealistically cheap policies through clear product guides, a transparent quote and buy process, and easily-digestible policy terms and conditions.

Data enrichment to tackle consumer fraud and optimise pricing

With price being a particularly sensitive talking point in 2022, insurers must also do all they can to combat consumer fraud using the latest real-time data available to them, otherwise they run the risk of implementing inefficient pricing models that negatively impact honest customers who may already be feeling the initial pinch from the dual pricing ban when selecting a new policy.

Data enrichment can assist in accurately ascertaining the link between bad credit risk and the likelihood to claim. Or identifying the risk of payment fraud based on credit data – this is especially important for short-term insurers as payment could potentially be rejected after cover has expired.

Another increasingly important aspect for all motor insurers is to use the most accurate data to legitimatise the validity of a customer’s ability to drive and qualify for any restrictions on driving offences. It also serves to dramatically reduce unnecessarily long and complicated question sets for the customer, thereby improving the overall user journey and customer experience.

Future outlook

Taking into account past and predicted trends, there is no doubt that the insurance industry still faces enormous challenges in the build-up to 2022. Those that continue to adapt with a customer-centric and technology-driven approach are likely to win brand trust, which will ultimately have a positive impact on the industry’s reputation moving forward.