# What will 2022 hold for the insurance industry?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-12-28
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: 2022 Insurance Industry Outlook: Navigating Uncertainty
Meta Description: Discover how insurers can navigate uncertainty in the upcoming year by enhancing internal systems, focusing on fair value pricing, embracing consumer
URL: https://financedigest.com/what-will-2022-hold-for-the-insurance-industryhtml

_By_ [**_Rupert Jarron_**](https://www.eisgroup.com/blog/2021/11/17/digital-insurance-platform-eis-appoints-rupert-jarron-to-lead-emea-and-accelerate-the-pace-of-market-transformation/) **_,_** _Managing Director of EMEA,_ [_EIS_](http://eisgroup.com)

2021 saw the eventual relaxation of COVID-related restrictions and vaccine rollouts on an industrial scale. With the [UK riding the wave of a sharp, yet unsteady recovery](https://assets.kpmg/content/dam/kpmg/uk/pdf/2021/12/kpmg-uk-economic-outlook-december-2021-report.pdf), post-lockdown Britain becomes an interesting climate for insurers – many of whom look back to 2021 as a year of natural disasters, supply chain crises and economic uncertainty. A year of change.

This looming uncertainty for the coming year, evidenced by Deloitte’s 2022 [insurance industry outlook](https://www2.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-outlooks/insurance-industry-outlook.html) and affirmed by the advent of [new COVID-variants](https://www.bbc.co.uk/news/live/world-59545557), begs the question as to what the coming year will bring? What should [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") be focusing on to ensure they are prepared for the next challenge?

This starts at the core of the business – internal systems. [COVID-19 accelerated digitisation](https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever) by several years for every industry and has been essential in enabling businesses to meet growing customer demands, but many insurers do not have systems capable of supporting this rapid change. Coupled with the FCA [regulatory reforms introduced earlier this year](https://www.fca.org.uk/publications/policy-statements/ps21-11-general-insurance-pricing-practices-amendments), it is clear 2022 will introduce another year of threats and opportunities for insurers. They are facing rapidly changing, often unchartered territory in terms of effects on assets and liabilities.

Looking forward, there are four [ways insurers](https://www.financedigest.com/predictive-analytics-a-new-way-of-insuring-success.html "Predictive analytics: a new way of insuring success") can stay ahead of competition.

**Getting “customer fair value” right**

The Fair Value pricing regulations (GIPP) that end discounting for new policyholders in the UK will push insurers to focus on building loyalty and [creating new added-value products](https://www.financedigest.com/4-tips-for-creating-a-calm-workspace-to-boost-productivity.html "4 tips for creating a calm workspace to boost productivity"). [Insurers with better change and technology capabilities will exploit new data](https://www.financedigest.com/how-data-is-revolutionising-car-insurance.html "How data is revolutionising car insurance") insights to quickly inform pricing, product, and customer experience developments in response to regulators. An agile test and learn capability will help them rebalance front book and back book [pricing that factors in bottom line and customer](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem") growth implications. They will also be able to provide [regulators with evidence that they are indeed fairly pricing and providing genuine value to customers](https://www.financedigest.com/bahamas-regulator-holds-ftx-assets-pending-delivery-to-customers-creditors.html "Bahamas regulator holds FTX assets pending delivery to customers, creditors"). Businesses without these [improved capabilities will fall behind the competitive curve or face the risk](https://www.financedigest.com/improving-risk-management-in-the-insurance-industry.html "Improving risk management in the insurance industry") of regulatory issues and fines.

**The year [Insurers get savvy about consumer](https://www.financedigest.com/uk-consumers-conflicted-when-purchasing-insurance.html "UK Consumers Conflicted when Purchasing Insurance") ecosystems**

Ecosystem has become a buzzword in insurance but the [ability to understand and participate in ecosystems has been sorely lacking](https://www.financedigest.com/lack-of-collaboration-and-skills-shortage-is-limiting-organisations-ability-to-meet-ifrs-9-requirements.html "Lack of collaboration and skills shortage is limiting organisations’ ability to meet IFRS 9 requirements"). 2022 will be the year this changes. Consumer needs have shifted and not one organisation is able to satisfy all the needs of their customers. Because of this, [insurers will need to take an outside-in perspective to rethink their value proposition to determine how they can fit into existing and emerging consumer ecosystems and win new customers](https://www.financedigest.com/5-ways-a-ccm-platform-can-help-improve-customer-engagement-in-insurance.html "5 Ways a CCM platform can help improve customer engagement in insurance").  As no single partner needs to build and orchestrate all the components, the ecosystem [approach also accelerates product and service innovation](https://www.financedigest.com/new-charitable-commission-sharing-model-is-for-lifeprice-comparison-website-launch-bolstered-by-innovative-approach.html "New charitable commission-sharing model is for lifePrice comparison website launch bolstered by innovative approach") — with one company’s efforts furthering all others.

**To embed or not to embed (Insurance)**

Embedded insurance is a [key](https://www.financedigest.com/as-the-cost-of-living-bites-tackling-insurance-quote-manipulation-is-key.html "As the cost of living bites, tackling insurance quote manipulation is key") ecosystem strategy for insurers. Major purchases, such as cars and homes, are increasingly digitally driven with little or no human interaction. Consider companies like Cazoo, the used car [marketplace that lets you buy a vehicle online](https://www.financedigest.com/online-marketplaces-embracing-embedded-finance-to-benefit-both-customers-and-vendors.html "Online marketplaces: embracing embedded finance to benefit both customers and vendors     ") and delivers it to your home. Or Zillow, which applies a similar model to home purchasing in the US. With growing adoption of new technology, [insurers will need to capitalise on the opportunity to embed policy purchasing directly into these digital](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!") buying experiences. By using open APIs to connect their products to an alternative distribution channel in an adjacent industry player’s ecosystem — such as retailers, tech giants, [financial institutions](https://www.financedigest.com/what-the-future-holds-for-financial-institutions-in-2023.html "What the Future Holds For Financial Institutions in 2023"), digital real estate marketplaces, and auto manufacturers, insurers will gain access to new customer pools.

**Convergence [provides the one-stop-shop experience consumers](https://www.financedigest.com/two-thirds-of-consumers-would-prefer-to-deal-with-a-single-provider-for-insurance-products.html "Two-thirds of consumers would prefer to deal with a single provider for insurance products") crave**

[Insurers will make a sustained effort to broaden their product portfolios across life](https://www.financedigest.com/types-of-life-insurance.html "Types of Life Insurance") and non-life to become more sticky with customers. They will increase focus on simplified buyer journeys that make data-driven supplementary product and [service offers attractive to customers in an effort to drive revenue](https://www.financedigest.com/adding-revenue-through-rd-tax-relief-service-2.html "Adding Revenue through R&D Tax Relief Service") growth and customer loyalty. Retention is increased with each additional product customers buy. Full-stack insurtechs like Lemonade and leading incumbents are pursuing this model vigorously.

To meet the FCA’s regulations, build ecosystems and offer consumers exactly what they need, when they need it, insurers must enhance their systems and technology. This is the only way to meet today’s challenges and stave off competition, especially from agile insurtechs entering the market. Cloud-native [tech and open](https://www.financedigest.com/jaguar-land-rover-opens-three-european-self-driving-tech-hubs.html "Jaguar Land Rover opens three European self-driving tech hubs") APIs are key, enabling insurers to roll out rapid changes and grow their ecosystem.

[Eight-in-ten insurer CEOs told KPMG](https://home.kpmg/xx/en/home/insights/2020/11/the-covid-19-catalyst-insurers-race-to-digitize.html) rapid digitalisation, accelerated by the pandemic, ‘turbo-charged progress on the creation of a seamless digital customer experience.’ This is essential to stay competitive in the digital age and to meet evolving customer needs, but legacy systems cannot support it.

If insurers want to be prepared for the unexpected in 2022, and swiftly accommodate market changes, they need to be equipped with the right technology. Only then can they quickly offer new customer-centric products and [services at scale when needed](https://www.financedigest.com/top-5-seo-services-you-need-to-succeed-in-2022.html "Top 5 SEO Services You Need To Succeed In 2022").

[EIS](https://www.eisgroup.com/company/), a core and digital platform provider for insurers with over 1300 employees globally,  helps insurers stay agile in a demanding and ever-changing market. It is currently [partnering with esure on its large digital](https://www.financedigest.com/veraviews-welcomes-hoopla-digital-as-a-demand-partner.html "VeraViews Welcomes Hoopla Digital as a Demand Partner") transformation program.


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