The 2023 year was one of change and evolution for the insurance industry. Disruptions, including climate change, economic downturn, and significant financial challenges impacted the industry and prompted insurance companies to make changes. As we move into 2024, we’re likely to see more of several current trends in insurance.
These latest trends in the insurance industry are changing not only how insurance companies operate, but also how consumers interact with insurance companies.
Increased Artificial Intelligence (AI) Use
As AI and machine learning technologies continue to evolve, they will play a larger role in the insurance industry. Insurance companies will likely use AI to improve communication with policyholders and facilitate the claims process. AI may also be used in underwriting, risk assessment, and calculating policy prices.
Insurance companies may face obstacles with AI implementation, including the lack of regulatory guidance currently exercised over the technology. But, as AI use across all industries evolves, we’re likely to see increased regulatory and usage guidance that will allow the insurance industry to embrace these tools further.
New Products and Partnerships
To continue delivering value, insurance companies will likely pivot and offer some unique and broader policies and options. For example, as the freelance industry’s growth has been spurred on since the pandemic, there’s an increased demand for products like insurance for gig workers. The development of apps has allowed for the increased use of telematics in the car insurance industry, so consumers can now access car insurance rates that are based on their driving habits.
The increased threat of cyber attacks means that insurance companies offer more products like cyber insurance. Insurance providers are also exploring partnerships and leveraging technology in other ways. For example, State Farm offered customers free Ting sensors, which can help identify electrical system abnormalities and potentially prevent electrical fires.
Improved Customer Service
Customers are increasingly shopping for insurance deals and are less likely to gravitate toward insurance bundles than in previous years. J.D. Power reports that in 2022, 76% of customers who had been with their home insurance provider for less than one year bundled home and auto insurance. In 2023, that percentage fell to just 66%, indicating a significant shift in consumer behavior.
To engage with customers and earn their loyalty, insurance companies need to deliver a quality overall customer experience. Companies need to deliver a smooth and enjoyable experience through every stage of the customer lifecycle, forging those valuable personal connections that help customers feel seen and understood. While customer interactions are increasingly digital, establishing that personal connection is more important than ever.
Navigating Natural Disasters
The extreme weather events of the last few years and the increasing frequency and severity of natural disasters have translated to increased claims and insurance company losses. The impact of those losses can be seen as many insurance companies announce that they’re no longer writing new homeowners insurance policies in high-risk states like California and Florida.
Climate disclosure rules currently in development are likely to impact how insurance companies address climate-related risks. Additionally, we’re likely to see more companies providing resources to help homeowners prepare for natural disasters, like fire mitigation discounts and severe weather preparation programs.
While 2023 was a year of change for the insurance industry, we’ll likely see certain trends continue and grow in 2024. The insurance industry has faced significant challenges, and to survive, insurance companies will need to identify innovative strategies.
As you shop for insurance, consider whether you’re choosing a company that promotes sustainability. If you have an electric car or eco-friendly features in your home, a sustainable insurance company might offer discounts and other incentives to help keep your costs down. Plus, you’ll have the satisfaction of supporting a company that promotes the causes you believe in.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
