Tech Expected To Fuel Massive Industry Growth

By Joel Zwicker

2022 is poised to see continued turmoil brought on by the pandemic that has affected the insurance industry over the past two years. The acceleration of technological adoption has allowed agents to adjust to the changing times. The industry is about to experience massive growth that will result in specialization, massive technology investments and increased communication with clients. These key areas are the catalyst for how insurance agents and agencies will continue evolving in the new year.

Expanding Beyond Regional Borders

New business potential now reaches beyond regional boundaries. A niche can draw in customers nationwide, and agents who haven’t adjusted their business plans will miss out on this massive opportunity in 2022. Location, and the ability to see an agent in-person in an office, used to be the biggest factors when looking for an insurance agent. But now clients are prioritizing an agent’s expertise to match their specialized needs. In an evolving world where you can find the answer for any issue, a reliable partner that is responsive and experienced outweighs any benefits that come from face-to-face interactions. A McKinsey report confirms that the future of agent models benefits from “well-articulated value propositions targeted at a small number of customer segments.”

With a pivot toward a more targeted approach, agents are setting themselves up for greater success. Keeping your client base targeted with niche offerings can provide a similar, if not higher, profit margin than if providing broader coverage. Additionally, embracing this model will make it easier to find like-minded clients who are likely to recommend these services to others in their specialities. Often, clients with specific needs are left without the full breadth of the insurance coverage they need when using a generalist who is unable to serve them adequately. Specialists can be that partner clients rely on, and agents who specialize will find less competition and ultimately make more money.

Continued Investment In Insurtech

The pandemic accelerated the adoption of technology. If current trends continue, 2022 will see record investment and higher adoption rates. For reference, the global insurtech market size was valued at $2.72 billion in 2020 and is expected to expand by more than 48% from 2021 to 2028, according to a market analysis. Embracing new technology provides not only a basis for increased revenue, but continues to drive the industry to remain competitive in keeping and gaining clients.

This frenzied investment is ensuring that the industry is evolving and continually embracing digital transformation – a key benefit for agents who have a growing book of business and whose manual process can be supported via technology. The pandemic is pushing our world to become more digitally compliant and clients need the same flexibility from their agents and agencies.

Prioritize Communication Around Cyber Insurance Or Risk Consequences

The impact of COVID-19 extends into the business world with INTERPOL finding that cybercrime has shifted from individuals and small businesses toward major corporations, governments and critical infrastructure. They also predict that cybercrime will continue to increase in the next few years – something that insurance professionals must acknowledge and work to prioritize in the coming year.

To do this, agencies must start or continue cybersecurity conversations during all renewal processes so clients are aware of any possible gaps in their coverage. Explain to clients that before starting a new coverage year, it’s critical to take a step back and access their risk profile and tweak their underwriting to better protect themselves. Protection from loss is important, but more important is the idea that agencies who fail to have these conversations can be held liable for any losses that are incurred. This is especially true if the client feels that they were not made aware of the financial risk of cyberattacks and the appropriate protocol they should follow to ensure they are covered from such risk. Cover your agency by constant communication on the topic in all forms available to ensure compliance.

While no one has been unaffected by the uncertainty of the past two years, the insurance industry is poised to come out of the ongoing crisis stronger and more resilient than ever due to its adaptability. No matter what the next few years bring, these predictions show that insurance agents are flexible, innovative and progressive. The human touch that individual agents bring to the client experience will only be improved by adjusting their offerings and using all available technology to meet client needs.

Joel Zwicker is the “chief evangelist” at Agency Revolution. He may be contacted at [email protected].