3 digital home insurance opportunities in 2022
For years, technology has been transforming the insurance industry, and that trend will only accelerate in 2022. From auto telematics to IoT smart home devices and beyond, insurers are leveraging technology to reduce risk, boost customer engagement, and offer customers the best experience and peace of mind they desire. And in many cases, they’re looking to leverage technology already connected in so many homes, with a recent Nationwide survey finding 66% of homeowners own at least one smart home device.
While the possibilities for technology to transform insurance even further are endless, many of the opportunities that exist now and in the coming year are being shaped by the world around us and the uncertainty created by the pandemic. Here are my three predictions for the insurance industry in the year ahead, and how technology can play a pivotal role.
Hot Housing Market = New Opportunity
A hot housing market and low mortgage rates in 2020-2021 caused many homeowners to move and switch insurance providers in the process. This impacted growth and retention for nearly all carriers. But this doesn’t have to be looked at as a negative.
In 2022, we’ll see more carriers looking to capitalize on both those homeowners that are moving, as well as a new generation looking to buy their first home. More insurers will turn to technology like IoT smart home devices to differentiate their offering at the time of sign up (often lowering customer acquisition costs in the process), and in many cases, customers will receive a discount on their premiums in return. In turn, we predict that smart home devices will continue to grow in popularity, reaching a 50% adoption rate in households by 2023, up from 36% this year.
No Blind Eyes When It Comes to Risk & Churn
In 2022, carriers will focus on improving the enrollment process across legacy carriers. With increased competition and more consumers shifting their behaviors online, they can’t afford to have an outdated interface or poor UX. With more consumers relocating across the U.S., carriers will have to find a way to make it easy to retain customers. Typically, legacy carriers only interact with customers at the time of policy activation or claims – making this proposition even more difficult.
Many carriers will continue to turn to new programs (like smart home, auto telematics, etc.) that collect data, allowing them to engage with and educate customers throughout their journey, while strengthening loyalty in the process. That trust and engagement component will become more important than ever to acquire and retain customers in the year ahead.
Increased Interest in Loss Reduction Due to High-Impact Weather Events
Severe weather events have become more frequent and more damaging, and according to experts, that trend is expected to continue. In the past year alone, events like last February’s Texas freeze, and numerous hurricanes and tropical storms drove up the overall number of insurance customers impacted and the volume of weather-related claims. In fact, weather-related insurance claims cost the insurance industry over $105B in 2021 alone, driving up premiums for all.
As we head into the new year, we expect these high-impact weather events to continue inspiring insurance carriers to renew priorities for loss reduction as they look for new ways to drive down claims. Because of this, we’ll see carriers prioritize more focused initiatives around risk management and underwriting, especially for perils like water and fire.
As we wait to see what 2022 has in store for the insurance industry, one thing is clear: technology is playing a major role in shaping the future of an industry that has operated in much of the same way for decades. The world around us is changing the way homeowners want their properties insured, and how risk is monitored and mitigated. And technology is paving the way forward.
