Many small businesses lost massive amounts of money due to the COVID-19 situation. Shops had to shut down, deliveries halted, and many other things happened that changed the very fabric of businesses on Main Street USA. That raised the profile for insurance companies to help people protect themselves. That said, insurances companies also experienced a dip. With the new year on the way, insurance companies are gearing up to recover from their slumps. From creating innovative new products to using tech-powered solutions to mindset changes, there are a host of developments that will lead to this recovery. Let’s look into a few of these and what they may mean for the insurance industry in 2022. Here are some random musings of an insurance pro.
Insurance in 2022
1. There Will Be Growth
The pandemic was harmful to the insurance industry but things will look up in the new year. Essentially, higher prices will improve financial performance. Plus, there will be a strong rebound in economic activities and pandemic-related losses will be less as we learn to live with the virus. These will outweigh the detrimental effects of declining ROI, increasing natural catastrophe claims, and inflation. Therefore, 2022 could well be a good year for insurance companies.
2. Digitalizing Processes
More insurance companies and customers will demand digital means to do work. They’ll want to request information and buy and deliver services online. That would make these processes accessible from anywhere in the country. Companies will have to optimize their current processes by using web pages, apps, and more. They will have to offer insurance contracts online. All these developments will optimize many existing procedures and help insurance companies migrate slowly to a more digital and automated environment.
3. Innovation and Flexibility in Insurance Policies
The pandemic saw many firsts. From the closure of entire economic districts to a spike in health-related claims. Many times, insurance companies were left wondering what to do. That made it abundantly clear that companies would have to become more innovative and flexible with their policies. They will have to create more specialized policies that focus on the current needs of the users. Companies will have to invest in studying the interest of their clients and then offer them innovative solutions. They must also create different options that can be adapted to the insured person’s lifestyle.
4. Covid-19’s Impact on the Business Insurance Market
Market research suggests that the global pandemic has pushed business owners to become more open towards insurance. But experts predict that total premium volumes will return to pre-pandemic ranges soon. That’s an important mindset shift, especially for small and medium-sized business owners. A Hartford study revealed that unfortunate and unexpected events occurred more frequently than small business owners realized. 40% of SMBs are likely to experience a property or liability loss within 10 years of doing business. With pandemic restrictions loosening up and environmental disasters on the rise, insurance is going to be even more important for SMBs in 2022. But what will be on their insurance radar?
5. Business Insurance Developments
The most frequent claims for business insurance include theft, burglary, pipe damage, environmental damage from hail and wind, and slip and falls. These affect both larger corporates and SMBs. While corporates have large teams of lawyers and the resources to deal with disasters, smaller businesses would find it difficult to cope. That’s why 2022 will see SMBs looking to protect themselves from these kinds of disasters and problems. If they don’t, they could go out of business.
6. Commercial Property
The commercial property insurance market next year could see an uptick in competition among renewals because additional capacity is predicted to enter the market. Carriers will have to develop creative solutions to address the changing landscape of risk. Coverage will also stabilize. The average increase in property rate is 8% or so. The new capital will have a positive impact on commercial property insurance renewals. Insurance companies will help businesses realize their goals by protecting them from several disasters.
7. Worker’s Comp
Last year, there were tremendous fears based on whether workers would contract COVID-19. That concept terrified insurers. Now it’s clearer that worker’s compensation will be among the most competitive and high-performing property and casualty insurance range. The importance of this product will continue to gain traction in the new year but with less of the fear surrounding it. SMBs will be especially keen on getting these policies as they would want to kick start the new year and make it as profitable as possible.
8. Commercial Auto Insurance
Auto liability coverage has always been a bit of a risky proposition for US insurers. The volume of auto claims will limit the driving activity for many businesses. Auto repair and medical costs are on the rise and insurers are also afraid that auto losses will go up once driving activity levels return to pre-COVID-19 levels. The profitability of these policies will grow slowly. SMBs and individuals both will want this policy to protect their commercial vehicles and keep their businesses running.
9. Commercial General Liability
2022 will see an increase in commercial general liability policies being issued. That may be more for high-hazard industries such as manufacturing industries. Habitational real estate owners and operators, shared economy firms, and more. This includes settlement amounts for primary, general, and products liability cases.
These are the things that come to mind when I think about the insurance landscape in 2022. Would your list be similar? What else would you include?