2024 Predictions: What to expect in the year ahead

2024 Predictions: What to expect in the year ahead

Inflation has significantly affected consumers over the last two years as the cost of food, vehicles, housing and interest rates have climbed, and insurance has not been immune to this impact. Rising replacement costs, labor shortages and supply chain issues post-pandemic have affected multiple areas within the property and casualty space, resulting in higher premiums.

Another issue for insurers is that as technology adoption grows, consumer expectations are changing and 44% of industry professionals say that customers now expect a fully digital experience and 58% of carriers agree that their customers want digital interactions. In addition, 24% of professionals state that those customers expect more transparency through each phase of the insurance process.

Looking ahead to 2024, there are evolving risks like generative artificial intelligence (AI), the ongoing expansion of customer demand for a fully digital experience and changing work environments that will impact industry players’ ability to attract the next generation of workers. Fears about a recession and increasing inflation also continue to weigh on the industry. Further, more severe storms and increased damage from wildfires have resulted in carriers pulling out of Florida, California and several Gulf states, leaving policyholders more exposed in the event of other natural disasters.

Evolving customer needs and expectations, emerging risks and the need to address weather-driven coverage gaps highlight the importance of adopting new technologies. In this report, we examine the many issues facing the industry and explore how carriers, agencies and insurtechs are planning for growth and investing their resources.

Learning what the industry thinks
During October 2023, Arizent, the publisher of Digital Insurance, reached out to professionals at insurance carriers, agencies and tech firms to lend their insights about the issues they anticipate facing in 2024. A total of 100 qualified leaders and staff at insurance carriers (40%); managing general underwriters, agencies and brokers (32%); and insurtech firms (27%) participated in the survey. The companies represent enterprises of all sizes ranging from less than $5 billion in written premiums (58%), to $5B to 10B in premiums (13%) and companies writing more than $10 billion in premiums (29%).

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Fifty-three percent of the respondents are leaders in their company, business unit, division or department as compared to our previous survey, when that number was 42%. Titles include president, chairperson or CEO; other C-level executive, senior business unit executive and division/department head.

Key findings
●        Sixty percent of respondents believe inflation poses the biggest threat to insurance business growth in 2024, while 56% identify a recession as the second danger facing the industry.
●        Customer service is the most popular practice area for digital transformation.
●        Six in 10 agree that while AI is valuable to the industry, it is still too risky to use in their companies or to insure customers currently using it.
●        Forty-four percent of firms anticipate spending the same amount on insurtech in 2024 as they did in 2023.
●        If given a magic wand that could fix one thing standing in the way of their future, companies state the ability to modernize their legacy systems as their top priority, confirming that digital transformation is still underway.

The full version of the report is available here.