Consumers will be feeling the pinch in 2022 due to a combination of higher taxes, energy, and fuel costs. The impact will cause people to become more price conscious as they look to save money where possible to help them remain financially stable.
Insurers will need to invest more in keeping customers happy to retain them. This could mean a greater focus on investment in servicing existing customers to improve customer experience and increase retention rates, especially for car and home insurance.
New FCA regulations that came into force last year in the home and motor insurance markets mean renewal quotes for existing customers in these markets must not be more expensive than quotes for new customers. So, there is an even greater need to keep existing customers in these markets, as churning through high numbers of customers won with cheap introductory offers is no longer an option.
Keeping customers happy requires insurers to invest more in digital services and migrate to digital platforms to improve customer experience as customers increasingly demand insurance delivered how and when they want it via easy-to-use digital interfaces. Insurance has traditionally been slow to adopt digitisation because of its complexity. But the growth of deployment in Artificial Intelligence (AI) and Machine Learning (ML) means digital platforms can now process extremely complex data sets more quickly and advise the most efficient or effective solution to a complex question.
As more relevant information is gathered by insurers to create ‘Big Data’, insurtechs are helping insurers adopt new digital platforms to improve customer service, which means claims are paid out faster, with minimum fuss and trouble. Automation also makes processing claims cheaper for insurers, which means they can offer cheaper policies.
Investing in digital platforms to offer better service and better value for money is an attractive way for insurers to keep customers in 2022, especially when the economic hits are amplified as tax rises are introduced in April. As so many insurers are now following suit and investing in digital platforms, the market is seeing a ‘race to the top’ trend, as insurers battle it out to offer the best digital services to help them win and retain the biggest market share.