Insurance 2023

Toby MacLachlan, 3 February 2023

Industry trends in 2023

2022 was an interesting year in insurance. Kicked off by the ‘price walking’ bombshell on Jan 1st we saw lots of market churn, aggregator volumes down, and frenetic rate resetting. Then the domino effect of Putin > energy prices > mini-budgets > (claims) inflation… cue more pricing faff. What will 2022 loss ratios look like? All over the place most likely. And on the tech side of the equation, all tech stocks (and tech investments) took an Olympic finals-sized dive. Wages up, investment down, rates everywhere… messy. (Thankfully Ignite is fine)

The end of digital transformation

One of the over-hammered phrases from 2022 was ‘digital transformation’. It gets touted by all the tech firms and larded onto every press release and industry feature piece going. Well, I’m going to draw a line in the sand and say that digital transformation is now ‘done’. Lots of brokers have already done it, are finally doing it after years of procrastination, or won’t do it (bless ’em). I don’t want to overblow the trumpet but all Ignite brokers are digitally transformed: they’re 100% cloud, offer customer digital self-service where required, and have low-cost bases through high automation. 2023 will be about digital transformation for some, but I’m most excited about 2023 being the year of product development. This is something that rarely happens when digital transformation is happening – the focus is usually on digitising what’s already there. Now (by proclamation) the transformation is done… roll on product innovation. 

Exciting stuff

So what product development will we see? Here are just a few things we’re already working on that will be fun: 

  • Long-term policies. Why stop at 1 year? With inflation riding high at 10%, a 3-year car or home policy is suddenly quite attractive. In general flexible policy terms will become the norm.  
  • IoT. Cars and homes (and even pets) are connected these days. We’ll see new products informed by data dissemination that others can’t compete with. All cars made after 2019 (and many before) are ‘connected’ and their live data accessible to insurers. This has been talked about for a long time but it’s becoming cheap and will therefore soon hit the mainstream.  
  • Price optimisation. AI has come to town and it’s here to stay. If you don’t believe me you’ve not asked chatGPT to write you a love poem about underwriting. This (AI not the poem) will make pricing so much more dynamic and render massive hoarded data sets increasingly redundant. Market benchmarking, live pricing data and AI-driven product flexibility will become the standard.  

The end of insurtech

Another word that’s going to be increasingly problematic is Insurtech. With the macro-economic climate being what it is (rubbish) there will be a fair few insurtechs falling by the wayside. However quietly they do it the brand will still be tarnished. Years of outlandish claims (we’ll get you live in 24 hours/2 weeks/pick your poison) and insurer hostility haven’t helped, and so 2023 may well be the year we see companies distance themselves from the term. That’s why we’ve drawn another line in the sane: Ignite, now 10 years old, is a software house, not an insurtech. 

What else is not happening in 2023? 

Finally here are some things that I don’t believe are going to disrupt anything this year.

  • Embedded insurance. It’s just not happening. The idea is good (insurance at the point of product purchase), but the tech and capacity and investment required to make it really work are just not justified by the volumes available. Expect one or two nice examples but no stampede.  
  • Never-ending consolidation. The consolidators have spent a merry few years buying up every Tom, Dick and Hastings at inflated prices. It’s fine to have £1bn of debt when the base rate is 0.25% but at 4%+… less so. Might we see a collapse or two and a hoovering up of the pieces? Maybe not right away, but if things drag on as they are then who knows…
  • Low-code/no-code. I’ve yet to see a really impressive system for insurance that is low- or no-code (or at least one that doesn’t require plenty of training, have severe limitations that require coding, and which can’t be messed up in 2 minutes by an incompetent operator). And anyway, these days you just ask ChatGPT to write you code for what you need. Now that’s real no code 🙂

And finally, what of Amazon insurance? Their current aggregator-lite home insurance site will soon be joined by motor. Will there be an upgrade to the current system/model? They’ve just made 10,000+ redundancies so it remains to be seen whether this newly-launched insurance offering will snowball or mothball…

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