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2022 predictions for insurance – crowdsourced from the frontline

We asked 16 innovation experts to give us their predictions for insurance in 2022 on Episode 172 of the InsTech London podcast.

You can listen to that epsiode in our Podcast section or scroll down to read Robin’s write-up of what our guests had to say, including a few extra predictions that we couldn’t squeeze into a 30-minute podcast.

2022 Predictions for Insurance – Crowdsourced from the frontline

For context, I should say that at the end of 2020, we held a Predictions Party and invited a selection of InsTech friends to provide us with a short prediction about the insurance in 2021 in return for a fine bottle of wine. We then turned it into one of our most popular podcasts.

It was such a success that we resolved to make it an annual event, so we have done much the same this year, but better. In keeping with these austere times, we dropped the party and concentrated on the podcast. The participants this year are genuine connoisseurs, not of wine, but of the future of insurance. We are massively grateful to the stellar cast of 16 pundits who gave their time and wisdom to the cause. To paraphrase an Oscar-winner, “I’d like thank everyone involved in the making of this podcast – it couldn’t have happened without you”. The same can be said for the kind support provided by our sponsors Fadata.

I implore you to listen to the podcast. I know it’s a self-serving thing to say, but thanks to the quality of the people involved, it really is very good. Although there is a lot more insight on the podcast than in this article, if you prefer to consume your wisdom optically, not aurally, here is a personal selection of the greatest hits. The basis of selection is that I happen to agree with them, or they stand out for being intriguing and novel. The extracts set out below have had some minor edits for readability.

Let’s start with a few predictions about the general state of InsurTech funding and in particular, predictions about valuations and availability of money in 2022.

The boom in investment over the last year has, in large part, been driven by generalist investors who’ve realised that insurance is a particularly challenging space to do well in. We expect that some of these are going to the side lines.
Matthew Jones, Managing Director, Anthemis

We’ll begin to see some incumbents spending their balance sheets. The last couple of years, we’ve had some good hard returns and cash flows are looking good. So, I think we might start seeing some investment acquisitions by the incumbent insurers of InsurTechs.
Charles Burgess, CEO of International Distribution, Munich Re Speciality

Scale-ups will attract capital from venture capital, and successful ones have done that. Some have gone two stages, too, which is bigger rounds. Some of them have used SPACs or IPOs to go public and build out war chests– to go hunting and fishing for companies to buy. You get a natural shakeout in the industry and some consolidation, and I think you’re going to find that accelerates into 2022. The specific area where I think this could be very interesting is InsurTech MGAs.
Premal Gohil, Head of Innovation Partnerships and Investments, Liberty Mutual

We are still to see genuine innovation that creates value by opening up new markets, by changing the price point or cost point of how something is created, how services are delivered, or how products are manufactured. The stopping or the slowing down of easy money in the near-term future is going to challenge some existing businesses. I would suggest those who will win out will be those who can provide business models that create genuine innovation rather than superficially changing, but in essence replicating, what is already there.
Sasa Brecerevic, Global Head of MGA Strategies, Aon

So, where are the big investment opportunities for 2022 and where will the money go?

Supply chains are a problem that insurance and reinsurance has been dealing with for a number of years. We’ve seen disruptions in the form of congestions and labour material shortages. Everyone wants to get their Christmas presents! I, therefore, think that the companies that can provide good risk insights into the supply chain and are able to take that risk perspective and provide it transparently to insurers next year will be the winners.
Ruta Mikiskaite, Head of Client Solutions, UK and Ireland, Swiss Re

The market cap for cryptocurrencies has moved from $500 billion to $2.5 trillion in 12 months. We cannot ignore it. Cryptocurrencies can be a store of value method of payment and an asset for speculation. We can clearly see this as more than a passing phase. We are going to move from network companies controlling and making the money, to users controlling the networks. This ecosystem is open and it’s decentralised. We’ve got countries recognising Bitcoin as legal tender. We’ve got millions of crypto wallets, NFT accounts and thriving communities on apps like Discord. What we as an industry can do is insure crypto assets, insure crypto businesses, start accepting crypto as payment, and hold it as a balance sheet item. We can be absolutely sure that we’re going to see more activity in the space in 2022.
Jenny Williams, Portfolio Optimisation Director, Convex

We’ll be hearing a lot about the cyber world, the metaverse and everything going digital. And besides the hype, the reality is, as insurers, we cannot ignore it because our mission is protecting everything our customers care about today – and the things they care about are moving to the digital world: their identity, their assets, their family relationships, their businesses, their memories. Everything is there in the digital world. So, if we need to protect it, insurers have no choice other than to be there and to help them prevent, act, and help clients recover from all the bad things that can happen there.
Joan Cusco, Global Head of Transformation, Mapfre

Digital is opening up even bigger audiences and making it more convenient for people to buy embedded insurance products. There are new audiences who maybe wouldn’t have considered buying embedded insurance in the past, who are now transacting online so the product can be presented there. With the advent of the additional data that the digital innovation throws off, the customer can benefit from better pricing and personalisation. New communities are being opened up that provide opportunities for ongoing engagement, and critically for insurers, they can start integrating prevention activity as part of that embedded insurance partnership. I think it’s going to be incredibly exciting.
Mark Allan, General Manager for Business and Specialist Products, Bupa

I think we’re going to be seeing more and more potent combinations of insurance and financial products. Many of the insurance businesses that we are backing are working with debt funds and are, for example, thinking about how they leveraged debit card propositions. This will further facilitate the embedding of insurance into other workflows, platforms and contexts.
Matthew Jones, Managing Director, Anthemis

Embedded insurance and ecosystems will undoubtedly develop and grow. The relevance of their access to the target customer base is significant. The economics are better than the traditional broker market, certainly for some of the more generic products and the fast flow retail and SME type products. I see this happening across life, health, and non-life.
Charles Burgess, CEO of International Distribution, Munich Re Speciality

2022 is going to be about ESG. As insurers, we know that we have to be really alert to both the risks and opportunities around us as we transition to a low carbon economy. The private sector is engaged now at an unprecedented scale, and it’s going to drive change. There are just masses of investments in green initiatives and our industry is needed to de-risk them where we can. We’re going to see opportunities in credit insurance, energy, casualty, aerospace and property. And, of course, we all need to be thinking about our own sustainable investments. Our industry needs to be well informed and engaged in the ESG dialogue.
Jenny Williams, Portfolio Optimisation Director, Convex

What we are seeing in our industry is a decomposition of the insurance value chain. This trend is illustrated by big players such as Bolttech from Asia and WeFox from Germany. They have built a huge digital platform, and the goal of these platforms is to manage a huge product portfolio. They’ve of course, got their own products, but they’re also asking some traditional players to digitalise their products and add to this portfolio which they make available to digital distributors. So that’s the first step and that’s what they are doing right now. The second one is to collect data from the customer through the distributors so that they can identify the production gap – what is missing. Then the traditional insurance players will be asked whether it is possible to design this product because it’s missing in the product portfolio. The third step is also the most interesting. When you have a large selection of products, you can activate the right one at the right time for the right people. There is only one industry that does this and it’s Netflix, Prime Video and Disney+. I have the impression that they are copying this approach, and it’s quite exciting
François Forge, Strategic Innovation Officer, Wakam

There were then a handful of really interesting predictions around the issues that the industry faces in sorting out its data and what can be achieved by those that make a success of it.

My prediction is that we’re going to go beyond just looking at some smart capacity and algorithmic syndicates. We’re going to be able to start joining up the whole journey from the front to the back in one single transaction. So, capture the structured data directly from the client, pass that through to a rating engine of an insurance carrier of the primary lead. They fire back that primary lead into the platform. The platform will then fire it off via API into the auto-follow Rethink rules engine. That will return capacity and terms from different sources, allowing our broker to complete a placement without ever setting foot in Lloyds.
Dan Prince, CEO, Rethink Underwriting

As we improve the quality of our machines and the confidence of their output, we’ll actually flip things on their head for a year or two. What we’ll see is that we’ll retain the human during the initial data entry, the initial keying in, but we’ll have the robots sitting in the background spotting anomalies and exceptions. It’s a lot easier for AI to be very confident about a possible human mistake than it is to be very confident about itself in the first place. We should all be looking out for the same fundamental technology being used but flipped on its head. So, it’s human-driven with the robot keeping an eye on them, rather than the robot doing the first bit of the process, and then the human having to fill in the gaps.
Paolo Cuomo, Director of Operations, Brit Insurance

We’re still trying to turn that massive unstructured information into structured data so that we can start making better-informed decisions on it. This is an issue relevant to all insurers at the moment. I predict a real fight for talent in the data space. You’ve got data analysts, engineers, architects, product owners, integration experts, and they’re all really valuable to companies at the moment. And I think this is going to be reflected in wages and the demand for those skill sets.
Jenny Williams, Portfolio Optimisation Director, Convex

We’re in a pivotal moment in the industry in terms of attracting different talents to insurance and reinsurance. We’ll see big numbers of data analysts, engineers and people experienced in the technology sector moving into insurance. Equally, we may see insurance professionals leaving insurance and going into the tech companies that are entering the insurance and reinsurance value chain.
Ruta Mikiskaite, Head of Client Solutions, UK and Ireland, Swiss Re

Our final two predictions come relate to the Life and Health insurance industry and come from eminent Chief Medical Officers.

My prediction will be that we’ll be contemplating cancer and negotiating some big challenges to the life and health underwriting process. There are a couple of things about the environment. Firstly, the process of diagnosing cancer may change radically over the next year and beyond with the development of newer technologies, where the aim is to find cancers early. We know that the pandemic had a detrimental impact on attendances for cancer screening, and we’ve got quite a lot of catching up to do. Secondly, are we going to be compromised by the subsuming of NHS and NHS Digital into the larger structure of NHS England? On top of this, we have a healthcare bill that sees potential fragmentation of the NHS between state and private provision, which will obviously have a potential impact on cancer services. So, there is huge potential for advancement, but much focus is needed on how we adapt our underwriting processes to accommodate such huge levels of change. There are many, many things we could ponder as developments in 2022, but cancer is going to be one of those right at the top of my list.
Debbie Smith, Chief Medical Officer Europe, Middle East and Africa, Swiss Re

My prediction for this year is that health insurance is going to have its fastest-growing year of the millennium. The reason I think that is we have all the ingredients – importance, impatience, interest, inflation, and innovation. The pandemic has shown us really clearly that health is the most important thing in people’s lives. It is impossible to open a newspaper or turn on the TV without seeing something relating to someone’s health. We also know that there was this paradox: while we see more and more talk about our health, people are getting unhealthier. Even before the pandemic, we saw people becoming much more impatient about accessing healthcare and wanting an experience more like retail and more like other industries that have already transformed. And we are seeing such exciting things in terms of the healthcare pathways people are having, which we’ve never seen before.

Even if I just think about what we’re doing at Vitality. Our members can have a GP consultation the same day, authorise their secondary care online, and access lots of healthcare partners remotely. They can have their moles checked remotely, have therapy remotely and have disease self-management programmes. There was so much now that members can access that didn’t happen years ago. I’m really looking forward to 2022.
Ali Hasan, Chief Medical and Healthcare Officer, Vitality

On that suitably upbeat note I will sign off. As another business guru, Peter Drucker, once said “The best way to predict the future is to create it”. We all have a part to play in creating the future in 2022. And don’t be surprised if we re-visit these predictions at the end of year and see how our experts did.

We might even spare one bottle of InsTech’s finest wine to the winner of the best prediction.

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