Insurance is all about prediction, but can it be predicted?

We are coming to the end of the year and prediction season. After the almost random last 18 months, chaos spurred on by a global pandemic, it seems absolutely pointless to predict anything anymore, but here we go.

The ability to predict the future is, to put it lightly, incredibly valuable. Everybody wants to know the future and, if possible, to change it if necessary.

Of course, insurtechs must be wary of false prophets. In addition, they must listen to the legitimate ones. If not, these accidental soothsayers will suffer the same fate as the Trojan priestess Cassandra, who nobody listened to, even as the city of Troy burned to the ground.

Forrester has stuck its hand in the ring and made four guesses:

• Insurers will try to outcompete each other on ESG credentials: on the back of the UN Climate Change Conference (COP26) and strong pressure from investors, insurers will incorporate ESG factors into risk management and underwriting more than ever.
• One-third of insurers will embed insurance: in 2021, 54% of insurers invested in digital channels to differentiate, but only 17% believe partnering with other organisations is a differentiator. In 2022, we see a third of insurers increasing their willingness to embed products within others’ ecosystems to extend their product distribution.
• A ransomware attack will hit a major financial market, forcing a cyber insurer exit: at least one top 10 cyber carrier will cease writing new business and selectively run off existing business in 2022.
• Digital insurance platforms will raise $20bn: ongoing digital disruption is prompting insurance companies to embrace digital platforms for delivering enhanced services. In 2022, funding will be its strongest yet.

Some of these predictions seem to just be continuing existing trends.

ESG is becoming more important than ever and insurers and insurtechs will quickly find it to be a differentiator among customers. People are wanting to help the environment, or at least be seen caring, so an ESG-first approach is needed at many firms.

Embedded insurance, and finance in general, is looking to be foregone conclusion. Customers are tired of shopping everywhere to get the best deals, they want it all in the same place. Banks and insurers are going to be a God send if they can master the convenience factor ahead of competitors.

Furthermore, the funding of insurtech will not slow down and $20bn is a very achievable target. A couple more unicorns in the sector is highly likely as well.

However, a cyber attack taking down a whole firm is a bold prediction. Cyber attacks are getting stronger, but it takes a hell of a lot to bring down an entire insurer.

Here’s to 2022 and all it brings. We’ll certainly be here to cover it.

Patrick Brusnahan, editor

Insurance is all about prediction, but can it be predicted?

We are coming to the end of the year and prediction season. After the almost random last 18 months, chaos spurred on by a global pandemic, it seems absolutely pointless to predict anything anymore, but here we go.

Insurance is all about
prediction, but can it
be predicted?

We are coming to the end of the year and prediction season. After the almost random last 18 months, chaos spurred on by a global pandemic, it seems absolutely pointless to predict anything anymore, but here we go.

The ability to predict the future is, to put it lightly, incredibly valuable. Everybody wants to know the future and, if possible, to change it if necessary.

Of course, insurtechs must be wary of false prophets. In addition, they must listen to the legitimate ones. If not, these accidental soothsayers will suffer the same fate as the Trojan priestess Cassandra, who nobody listened to, even as the city of Troy burned to the ground.

Forrester has stuck its hand in the ring and made four guesses:

• Insurers will try to outcompete each other on ESG credentials: on the back of the UN Climate Change Conference (COP26) and strong pressure from investors, insurers will incorporate ESG factors into risk management and underwriting more than ever.
• One-third of insurers will embed insurance: in 2021, 54% of insurers invested in digital channels to differentiate, but only 17% believe partnering with other organisations is a differentiator. In 2022, we see a third of insurers increasing their willingness to embed products within others’ ecosystems to extend their product distribution.
• A ransomware attack will hit a major financial market, forcing a cyber insurer exit: at least one top 10 cyber carrier will cease writing new business and selectively run off existing business in 2022.
• Digital insurance platforms will raise $20bn: ongoing digital disruption is prompting insurance companies to embrace digital platforms for delivering enhanced services. In 2022, funding will be its strongest yet.

Some of these predictions seem to just be continuing existing trends.

ESG is becoming more important than ever and insurers and insurtechs will quickly find it to be a differentiator among customers. People are wanting to help the environment, or at least be seen caring, so an ESG-first approach is needed at many firms.

Embedded insurance, and finance in general, is looking to be foregone conclusion. Customers are tired of shopping everywhere to get the best deals, they want it all in the same place. Banks and insurers are going to be a God send if they can master the convenience factor ahead of competitors.

Furthermore, the funding of insurtech will not slow down and $20bn is a very achievable target. A couple more unicorns in the sector is highly likely as well.

However, a cyber attack taking down a whole firm is a bold prediction. Cyber attacks are getting stronger, but it takes a hell of a lot to bring down an entire insurer.

Here’s to 2022 and all it brings. We’ll certainly be here to cover it.

Patrick Brusnahan, editor