A View From Me on ’23 – Clarity will be key as to how technology can deliver

Matt Carter, (right)  practice director, Altus Specialty Markets, and Jamie Bayliss,(left)  insurance consultant at the company examine the issues for 2023, with the use of technology and the London market’s blueprint pivotal.

London market transformation and Blueprint2, will see 2023 move into an 18 month period of deliverables defined within the joint venture with DXC and much socialising of the message.  Whilst there is most attention on market readiness and adoption, we think the real focus in 2023 will be the need for clarity on ‘what this really means for me’ and ‘what is the tangible materiality of the change for organisations?’ As an aside, it was disappointing to see the Digital gateway API being postponed.  Whilst this has not gone away entirely, given the capabilities we see APIs delivering for other financial services businesses, this should be on any critical path to being a truly digital market.

Cyber remains a focus both as an opportunity within the Speciality market, as well as a risk. In October 2022 alone, 134 organisations in the UK reported cyber-crimes including 33 reports related to business email compromise.  So there is a real need to provide more effective support for organisations in coverage (with some significant markets reducing exposure).  All propositions need to focus on prevention where lots of good technology solutions are available, as in many instances there is no cure following a cyber-attack on a business.

With the increased digital placing activity between brokers and carriers, the role of Underwriting Workbenches has come to the fore in 2022 and we see this continuing to grow in 2023.  But not all workbenches are created equal and not all business lines require managing the same way. However, the goal of delivering a single view combining insights, process, documentation and internal indicators to quickly help an underwriter manage a risk and understand its likely fit, is a solution no underwriting team should be without.”

Given the cost-of-living crisis not showing any signs of improvement, the general insurance market will face a continuation of existing 2022 challenges into 2023 and beyond. Consumers are paying more and more attention to their wallet. How do we see this setting trends in 2023?

With the introduction of GI pricing practices this year and the consumer duty regulations starting to bed in, customers are more aware than ever of their rights as a consumer and the benefits of staying on top of their insurance admin. They can no longer be penalised at renewal because insurers are trying to make up their new business acquisition costs but this has now impacted premiums at new business as well as renewals.

In 2022, consumers have been turning to price comparison websites (PCW’s) more than ever in order to find a better deal and this doesn’t look like it will slow down. But with insurers struggling to compete in a market that is so heavily focused on price, how can they become more competitive without new customer incentives or savings. We have already started seeing the answer in the form of ‘basic’ or ‘essential’ products, more so on Motor than Home, but will no doubt increase throughout 2023. Churchill, Admiral and the AA now all offer these budget friendly policies with lower sums insured and less features than a ‘regular’ policy on motor, but are yet to release a home specific product. We fully expect this to be a hot topic of discussion (if not already in the pipeline to be rolled out in 2023) in order to compete with Hastings and Policy Experts bronze and essential offerings on Home.

Staying with the theme of home insurance, we fully expect there to be a spike in renters’ propositions with data showing a clear increase in renters expectations to be renting for longer. Rising house prices, mortgage rates increasing, tighter affordability checks and tougher times to save, all contributing to the need to rent for longer. Insurers offering contents only are now looking at ways to create propositions specifically designed for the renter with shorter policy lengths, more flexible payment methods and tailored coverage. This is reflected in MoneySupermarket launching a renters specific panel albeit currently small, we expect it to grow considerably in 2023.

2023 really must be the year when claims as a service really comes to the fore. Everyone speaks customer-centricity and much has moved with the new entrants bringing in their revisioned products and distribution. But am afraid to say that despite much rhetoric, claims are still following in this path some distance behind.

“We have seen a significant investment in data analytics/data science/AI over the last few years, primarily focused on pricing & underwriting. I think there is an opportunity (we know some insurers are investing heavily in this capability, noting LV= specifically) in understanding how to operationalise this to support decision making at the front line (either call centre staff or online.) With the continued squeeze on costs and margin, better use of data science capabilities to direct customers down certain routes/present certain options could be very powerful. This is important in both sales and MTA’s/Claims.