What agents could expect in 2022 from insurtechs
A new year always brings a host of excitement, anticipation and predictions, and 2022 is no different. Technology investment is showing no signs of slowing down, M&A continues at a torrid pace, and the composition of the independent channel is shifting with generational changes. But one thing remains certain: the independent channel has a lot to look forward to in the coming year.
Continued appetite for insurtech investment
Last year blew away all the records for investment in insurtech, yet at the same time we saw a relatively lackluster performance from many insurtech darlings in the public markets.
In 2022, we’re likely to see a continued appetite for insurtech investment from private investors, as it’s easy to recognize the potential for technology to transform the industry. But we’re also likely to see one or two spectacular failures in the coming 12 to 18 months as some overvalued companies fail to maintain their momentum.
In this environment, those companies focused on distribution and distribution-related software are likely to succeed.
Insurtech carriers are turning to the independent agency channel
Over the past several years, startup insurtech carriers have gone to market with a consumer-to-carrier direct sales model. However, these carriers are realizing their target clients’ value and need skilled risk advice from insurance professionals.
In personal lines, we are seeing both auto and homeowner insurtech carriers enabling connectivity with traditional comparative raters in the channel to extend their reach into a market they originally believed was overvalued and lacking in technology solutions. In 2022, we are likely to see this trend accelerate, with more of these new carriers leveraging the independent agency channel to get their insurance products into the hands of consumers.
Digital engagement and data insights
The industry is finding more ways than ever to connect digitally. Agencies are increasing their ability to digitally manage their processes and communicate with clients in ways that increase efficiency, client retention and growth. In the coming year, we’ll see more agencies take advantage of solutions that allow them to automate their client communications and marketing in a way that still delivers valuable, targeted information.
In addition, carriers and agencies alike are finding new ways to use data insights. We’re seeing all parts of the channel use data platforms to identify areas of growth, better understand the behaviors of clients to improve retention and assess value and opportunity in the M&A process.
A mixed commercial lines outlook triggers a spotlight on account rounding, service and diversification
The outlook is somewhat mixed for 2022, as there is some indication from sources such as CIAB that premium rates for commercial lines will not increase as rapidly as they did in the latter half of 2020 and early 2021 or they may begin to flatten. Early indications across commercial lines products are that the hard market we have been experiencing may be softening for some lines.
This mixed outlook means a focus on account rounding with the aid of advanced data analytics tools could boost revenue and CLV for a particular account. Agents must also be better at servicing existing clients to keep their retention percentage up or even try to gain a percentage point or two to continue to see growth in their business.
Agents are also looking to other lines of business—such as cybersecurity policies—to make up for a possible flattening in commissions. As the industry grapples with ransomware losses, cyber premiums are likely to increase through 2022.
Expect the unexpected
As the pandemic lingers and the world continues to navigate uncharted waters, 2022 will be a year of further embracing insurtech across the industry as digital solutions and modern applications continue to make a significant impact on the entire distribution channel.
