4 Major Opportunities for Insurance Companies in Times of Recession
There are numerous opportunities to increase top and bottom-line results through organic growth and improved operational efficiencies, even in a challenging environment like a recession or economic downturn.
Need for Dynamic Shift in the Insurance Industry
Cyber insurance is in more demand today. With many customers polled by Deloitte Global requesting new policies, more flexible terms, pricing, payment choices, and more comprehensive loss control services, the small-business insurance industry appears to be ready for reinvention. However, carriers should exercise caution given that ransomware incidence increased by 235% in 2021 compared to 2019, and average ransom payments increased by 370% over the same two-year period.
Improve Technology Infrastructure
Many carriers prosper from the technology advancement being led by InsurTech companies, especially the point solutions provided by enabling startups in customer-facing areas like underwriting, claims, and online distribution platforms. In order to increase client-centricity, insurers should begin connecting their systems and data while utilizing cloud capabilities. Focusing on micro improvements while employing business-specific industry cloud applications may be a terrific next step.
Also, given claims that self-driving technology is still primarily experimental, predictions that the emergence of autonomous vehicles would redirect billions of premiums into product and professional liability coverages are likely to materialize sometime soon. This is because the technology and software controlling the car, not the driver, may be to blame in accidents.
However, as more vehicles enter the road, auto insurers should consider creating split coverage, perhaps in the style of hybrid policies already marketed to ride-share drivers, where personal auto coverage applies when driving for pleasure. At the same time, a different commercial coverage kicks in when going for pay. The same split-up policies might be promoted when autonomous systems are active, and drivers are in control.
Consider E.S.G as a Differentiator
Consider Environmental, Social, and Governance (E.S.G.) as a core feature of the business model. E.S.G. issues increasingly affect how all companies do business. Likewise, consider climate risk, where evidence is mounting that P&C insurers will soon need to revisit their business models. But, while many insurers have begun incorporating climate-risk considerations in their investment processes, new product launches and underwriting processes remain unchanged.
Find Your New Niche
The market for intangible assets, or non-physical possessions with monetary worth, is also growing and generating new exposures to cover. This includes cryptocurrency and NFTs to virtual activities on the metaverse. According to research by Aon and Ponemon, only 17% of these assets are now insured. Hence, finding your niche for crypto insurance can also benefit the future insurance business.