A challenging economic landscape is putting pressure on the insurance industry. From companies providing automobile coverage to those offering home insurance, the industry is expected to have low premium income growth in 2023 and beyond, according to a report from EY. The premiums for non-life insurance, for example, are expected to grow just 1.5% in 2023, a sharp contraction from the 4.1% growth rates in 2022.
Unfortunately for the insurance industry, problems extend beyond low premium income growth. A report from J.D. Power revealed how customer satisfaction levels with their property and casualty insurers’ digital offerings declined in 2022, while another report documented similar declines in customer satisfaction with their auto insurance.
Consumers are also switching providers in droves, with one survey finding that nearly 27% of policyholders have switched insurance providers in the past year. Considering that consumers continue to face high prices and recession fears, the pressure on the insurance industry will only continue to grow.
The “Money Mobility Tracker®” explores how insurance companies can navigate these challenging times by improving their disbursements and inbound payment processes.
Around the Money Mobility Space
The insurance industry is also under pressure from fraud. In 2022, fraud cost the insurance industry a staggering $308.6 billion, according to the Coalition Against Insurance Fraud. For comparison, the coalition estimated that fraud losses in 1995 were just $80 billion. The coalition tapped the Colorado State University Global White Collar Crime Task Force to provide all data and analysis to ensure unbiased and detailed findings.
A recent FICO survey suggests why insurance fraud might be so common and costly: Consumers are surprisingly open to committing it. The survey found that 42% of consumers in South Africa believe it is acceptable to exaggerate claims in at least some circumstances. Exaggerating claims is a textbook example of insurance fraud. Not all the findings were negative, however, as most respondents did not endorse this view.
For more on these and other stories, visit the Tracker’s News and Trends section.
Industry Insiders on The Ways Insurance Is Going Digital
There is no shortage of ways that companies can leverage digital solutions to improve the insurance industry. Around the world, InsurTechs, FinTechs and traditional insurance companies are bringing digital solutions to bear on nearly all aspects of the insurance experience, from improving how consumers shop and apply for insurance policies to streamlining the payout process to expanding coverage to the uninsured.
Competition in the insurance industry is growing fierce. The funding of InsurTechs — new entrants taking a technology-first approach to insurance — more than doubled between 2019 and 2021.
Worse yet, InsurTechs outperformed traditional insurance companies in terms of speed and visual appeal to consumers, according to one survey. Traditional insurers must understand what customers want from insurance providers and update their offerings and products accordingly — or risk losing out to those that do.
Near the top of customers’ preferences is speed. In one survey, more than half of respondents who had switched insurance providers in the past year indicated they did so for faster claims processing. Consumers also want better digital experiences, having grown accustomed to the digital-first experiences big tech companies offer. PYMNTS data also reveals how nearly half of consumers are at least very interested in their FIs using transaction history to present coverage options.
To learn more about consumers’ insurance preferences and how insurers can meet them, read the Tracker’s PYMNTS Intelligence.
About the Tracker
The “Money Mobility Tracker®,” a collaboration with Ingo Money, examines how a poor economy and sagging customer satisfaction levels pressure insurers to improve payments processes — or risk losing out to those that do.