Insurtech asked industry insiders and friends of The Insurtech Magazine to give us their best guess as to how things will pan out over the next 12 months.

Here’s an excerpt from the article featuring Clearspeed’s Manjit Rana.

MANJIT RANA
KEY TAKEAWAY: With capital in shorter supply, insurtechs will have to focus on generating revenue rather than hitting softer KPIs if they want to qualify for the next funding round

ECONOMIC SLOWDOWN

With inflation in high single or double digits across many of the world’s economies and a real risk of many entering, if not already in, recession, insurers will continue to be feel the blowback throughout 2023. One consequence of the cost-of-living crisis across all lines of business will be that the recent increase in fraudulent customer behaviour is likely to be sustained – both legitimate claims being exaggerated as well as an increase in falsified claims, particularly for lost gadgets. The challenge here for insurers who are focussing heavily on driving down settlement times, is how they put fraud mitigation in place so that legitimate customers are fast-tracked ahead of the others – and all without causing undue friction for a potentially innocent claimant.

As insurers put greater emphasis on automation to address the problem, we are likely to see a shift in the way that people are deployed across areas such as first notice of loss.Meanwhile, motor insurers face a unique set of problems. Second-hand vehicle prices have already risen significantly, by more than 40 per cent in some cases. This, coupled with a shortage of parts, such as electronic sensors, is driving up the cost of vehicle repairs. But when a market is in recession, it’s difficult to raise premiums as consumers focus more on saving money and getting covered than finding the most appropriate cover. This is likely to result in an increase in the number of uninsured vehicles on our roads, which leads to a whole other set of problems when prosecuting claims.

TALENT SHORTAGE

Insurers will spend this year looking outside of the industry for tech solutions that are being used to address similar challenges to their own. They will also focus on attracting people from other sectors who can view existing propositions and processes through a new lens. That said, it’s always been a challenge to position insurance as an exciting career opportunity. And while insurers are broadening their recruitment strategy, they are also likely to see an even greater proportion of younger staff exploring other opportunities that give them greater job satisfaction and flexibility. How they address that brain drain will be a key factor this year, especially as the trend for very senior people to take early retirement shows no signs of slowing. Many have moved into more of a portfolio career, spreading their time across multiple businesses – although we are seeing a huge increase in the number joining insurtechs as advisors on a part-time basis, so there is a ‘win’ there.

GROWTH STRATEGY

With capital in shorter supply, insurtechs will have to focus on generating revenue rather than hitting softer KPIs if they want to qualify for the next funding round. We are likely to see some early-stage companies being acquired by cash-rich insurtechs as they try to develop more end-to-end propositions. At the same time, legacy insurers will take the opportunity to capture cash-strapped startups as they focus on developing propositions that are more relevant to customers, particularly younger consumers and the gig economy, which they find hard to reach and service.

See the full piece at EXCLUSIVE: “2023 – The Year Ahead?” in ‘The Insurtech Magazine’