’Price adjustments and rate increases will lead to fierce competition as customers look for cheaper cover or cancel,’ highlighted Sollers Consulting
With later this month (17 December 2023) marking exactly four years since the UK parliament first met after the last general election in 2019, there will be “growing political pressure on insurers to limit premium increases.”
That was according to the latest report from insurance business advisory firm Sollers Consulting.
The Against the Wind: Insurance Markets and Technology in 2024 report, published today (5 December 2023), noted that political and regulatory influence is just one of three pressures that insurance firms would face next year, with high reinsurance rates and the financial impact of inflation the other two highlighted headwinds.
Sollers’ report explained that, to combat these challenges, “insurers will increasingly introduce cost-effective insurance models, such as embedded insurance. With the increasing variety and attractiveness of motor telematics insurance products, their popularity is likely to grow.”
The report was based on economic data and interviews with insurance industry executives and professionals in 15 markets across Europe, the UK, America and the Asia-Pacific region.
Despite a predicted political pressure to keep premiums low, however, the report predicted that inflationary pressures could also “force insurers to increase premiums”.
The report said: “Price adjustments and rate increases will lead to fierce competition as customers look for cheaper cover or cancel existing cover that they do not consider necessary.”
Artificial intelligence (AI) has been floated as potential technology for generating cost efficiencies, with Sollers’ report noting that “carriers will focus on data management in 2024”.
Niels Zijderveld, chief sales officer at Sollers Consulting, added: AI is about to fundamentally change the insurance business. But to utilise it, insurers need to invest in their IT infrastructure.
“Insurance companies will expand their strategies to reduce claims costs and focus on cost-efficient models through automated distribution and underwriting.”
Meanwhile, high reinsurance rates and the ongoing impact of claims inflation could also force insurers to redefine business models.
To counter this, the report predicted that UK insurers would increasingly introduce cost-effective insurance models, such as embedded insurance.
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