6 Insurance Trends to Watch in 2024

The insurance industry had a difficult year in 2023. While carriers can expect to see improvements in their combined ratios and profitability in 2024, they still face many of the same challenges as the last few years.

Several major insurers experienced multiple rounds of layoffs and early retirements, leaving these companies to rely on leaner staff to meet their business goals.

In property and casualty (P&C), carriers must navigate ballooning loss ratios. Claims expenses are increasing—driven by a mix of high repair and replacement costs due to inflation, social inflation and surging natural disasters. The latter, in particular, have driven property reinsurance rates up by as much as 50% in the U.S.

All of these factors have led many P&C insurers to stop issuing new policies or exit certain markets altogether in 2023.

Comparatively, the life insurance and annuity sector has been more stable. Rising rates have boosted net yields, balance sheets have remained robust and premium trends have been favorable as demand for savings and retirement products has grown. Yet, headwinds including inflationary pressures and risk transfer in the annuities and pension realm remain concerns.

To successfully navigate today’s challenging and dynamic market, insurers must rapidly innovate—and do so from a sound technological foundation. We’ve identified the following six trends that will shape the insurance industry this year.

1. Enhancing speed-to-market with consolidated systems and low-code tools is a must

The ongoing divestment of key markets is not a long-term strategy for success, so insurers need to fundamentally rethink their pricing, products and broader operations to thrive in today’s environment.

New products designed to promote better relevance and accessibility have emerged over the last few years and will continue to grow in popularity in 2024. These include offerings like on-demand insurance for gig workers, and usage-based products, informed by telematics and sensor data to drive behavioral-based pricing.

Insurers are also looking to expand the set of value-added services they offer customers. Examples include supplemental health and wellness management services offered through P&C carriers, and specialized retirement vehicles offered by life and annuity carriers.

Insurers are also partnering with lenders to offer home loans or refinancing options, and even security systems to help reduce home insurance rates. Market demand is also growing in areas like excess and surplus, as well as cyber insurance.

The industry is also experiencing a cultural shift, as insurers think more critically about their role in risk prevention versus serving purely as risk transfer agents.

Bringing these offerings to market quickly and effectively requires insurers to embrace agility and ensure they have a solid technology foundation in place. Legacy systems command a significant investment of IT resources and expense to maintain, are hard to upgrade and provide lackluster user and employee experiences.

Companies should begin transitioning from on-premises, legacy systems to cloud-based offerings. To date, a minority have done so, with only 38% of L&AH-only and 33% of P&C-only carriers having implemented replacements or upgrades of legacy or modern on-premises core systems.

As they reimagine their technology stack, insurers can also start bridging the gap between the present and future with low-code/no-code solutions. These offerings allow insurers to quickly assemble customized applications and workflows that accelerate their business.

Insurance companies should also identify ways to optimize their vendor footprint to eliminate redundancies across systems and maximize value through connectors and APIs that bridge different technologies together.

2. Companies must navigate talent constraints and turnover

While the insurance industry experienced a significant number of layoffs in 2023 (particularly in the P&C and insurtech domains), the long-term challenge lies in shifting worker demographics.

According to the Bureau of Labor Statistics (BLS), 50% of the current insurance workforce will retire in the next 15 years, leaving more than 400,000 open positions unfilled.

Even more problematic, the next generation is not clamoring to fill these positions. According to The Pew Research Center, only 4% of millennials are interested in insurance careers. Yet, millennials are estimated to make up 75% of the workforce by 2025.

Backfilling institutional knowledge gaps in highly specialized areas like underwriting and claims adjusting will not be easy, and carriers should look to digital technology and task automation as ways to support the next generation of employees.

Millennials and Gen Z are attracted to companies that are digitally savvy, offer flexible work arrangements and allow for career growth. Equipping these employees with tools and systems that eliminate tedious manual work and endless paper-pushing is essential to employee satisfaction and productivity. 

3. Distribution channels are expanding and shifting

The insurance distribution landscape has evolved significantly in recent years. It began with the rise of insurtechs like Lemonade, Hippo and Policygenius, which introduced more digital and user-friendly processes to the personal policy market.

The next wave of this evolution is embedded insurance, where insurance policies are offered at the point-of-sale of another product or service. Embedded insurance has continued to gain traction and is allowing insurers (particularly P&C firms) to meet their customers where they are in new and exciting ways.

Examples of this phenomenon are widespread and include offering homeowner’s insurance as an embedded part of real estate transactions, pet insurance at the veterinary office and auto coverage through the dealership. Nationwide is leaning heavily into this space, and in 2023 expanded its product offerings through its partner Rivian.

Yet even as the distribution landscape grows more diverse, the agent/broker channel remains dominant. Technology is an important factor in customer satisfaction and often drives new sales—particularly as consumers increasingly turn to agents as the channel of choice for obtaining new policies.

As they expand their strategic partnerships, insurers should think critically about how to effectively onboard new partners and ensure they have clear visibility into the terms of those relationships. They should also continue to invest in the agent experience, creating systems and workflows that make it easy for agents to do business with them.

4. The bar for great customer experience has never been higher

Today’s insurance consumers don’t simply demand more innovative products and expanded access across multiple channels; they also want better experiences that make buying insurance and engaging with insurers throughout the lifecycle simple, fast and frictionless.

Harmonious digital experiences are especially important as customers move away from the convenience of bundling their coverages to actively shopping for the best deals among multiple providers. According to J.D. Power, the percentage of customers with less than one year with their home insurance provider that chose to bundle home and auto fell from 76% in 2022 to 66% in 2023.

It’s clear that a multi-channel approach is essential, as digital channel usage for both claims and general communication is increasing. A J.D. Power survey found that 50% of respondents have used email to contact their insurer, 36% have used text and 30% have communicated via the firm’s website or smartphone app. Despite this heavy usage, more than 3 in 10 customers are not satisfied with today’s digital options, leaving significant room for improvement.

Insurers must make sure all stages of the customer lifecycle—from policy sales, agreement signing and disclosure provision to claims submissions and servicing requests—can be seamlessly completed and signed across multiple digital channels. This allows specialized staff, including contact center representatives, agents and adjusters to focus on the most complex questions and claims handling tasks, ensuring policyholders receive the best experience possible.

5. Advances in AI and data are accelerating transformation possibilities

2023 will be long remembered as the year that generative AI joined the public discourse. The insurance sector is no exception, and we can expect that the velocity of those conversations—around the use of AI, data and analytics—will only increase this year.

Insurance firms are primed to implement analytics and intelligence across numerous applications. AI has the potential to improve risk assessments for actuarial and underwriting processes, automating FNOL and claims resolutions, detecting fraud and enabling self-service via chatbots.

When applied to the many agreements and contracts underpinning insurance operations, AI can meaningfully empower insurers to uncover risks, unlock efficiencies and maximize the value of their contracts. Specifically, AI can help teams extract and understand terms of agreements, search and analyze their trove of agreements, and create and co-author new agreements.

6. Mitigating security and regulatory risks remains a top priority

American consumers lose $308.6B every year from fraud, which occurs in roughly 10% of all property and casualty losses. It’s no wonder that fraud remains a key concern for insurance providers and their customers.

As more transactions occur in the digital realm, insurers must remain vigilant around fraud mitigation and security. This means embedding identity verification and authentication throughout the customer lifecycle and within every touchpoint (including agreements) to ensure transactions are occurring with legitimate parties.

It also means taking a broader look at information and data security practices. Indeed, a growing number of states are adopting NAIC’s Data Security Model Law, and certain pieces of the New York State Department of Financial Services (NYDFS) Part 500 Cybersecurity Regulation will go into effect in 2024. In the spirit of these regulations, insurance entities should ensure they have processes in place to effectively monitor suspicious activity and administer strong user access controls. As hubs of sensitive customer data, agreements are a critical area for organizations to ensure compliance with all data security laws and best practices.

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To learn more, visit Docusign for Insurance and see how faster insurance agreements result in a better customer experience and accelerated ROI.

Manas Baba
Financial Services Industry Expert
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