US Insurance Industry Outlook 2021 - 2022

Insurance Industry Outlook

The COVID-19 pandemic has forced most sectors to make significant structural changes and the insurance industry is one of them. Due to layoffs, salary cuts, and shutdowns, many people have curbed optional expenses, which has made the industry even more competitive for insurance companies, insurance brokers and agents.

The after-effects of the pandemic will continue to hit the insurance and other industries hard. For example, workers’ compensation insurance sales has gone down because of huge job losses. A global outlook survey by Deloitte on premium projection shows that the volume may get back to pre-pandemic levels only after the fourth quarter of 2022. Small business premiums which took the brunt due to shutdowns and bankruptcies, may recover even slower if more businesses continue to close down.

During the same Deloitte survey, 48 percent out of 200 participating insurance executives admitted that the pandemic has shown the unpreparedness of the industry to weather an economic turmoil like this. Merely 25 percent strongly agreed that their insurance carrier has a clear strategy and action plan to overcome the current situation.

If you are considering buying insurance in 2021, this information will help you decide on the right time to make a move. Besides, it would be ideal to consult a reputable insurance broker to learn about a range of options.

The Decline in Life and Annuity Sales, Interest Rate Drop

According to forecasts, total life insurance premiums may recover to pre-pandemic levels in 2021.Life insurance premiums may dip by 6 percent globally and by 8 percent in developed economies. The projected recovery growth is likely to be 3 percent throughout 2021. Emerging markets may once again show the way, whereas mature markets will continue to struggle.

The annuity sales already took a hit in 2020. In the US, most annuities have dropped by double-digits in the second quarter of 2020, except for index-linked products. Growth and profitability for non-term life insurance products and annuities will continue to go through a slump in 2021 and beyond due to low-interest rates. The US Federal Reserve has already indicated it may leave rates close to zero at least until 2023.

The current scenario will keep posing challenges for insurers with exposure to less-liquid and lower-rated investment-grade securities. Similarly, for annuities, lower interest rates may prompt reduced benefits, which will make them less saleable.

Meanwhile, life insurers may witness 50 percent more losses related to mortgage loans than The Great Recession. You can check with an insurance broker to learn how these changes may affect your existing insurance or the one you may want to buy.

Insurance Forecast for 2021 and Beyond

In the aftermath of the COVID-19 crisis, organizations need to have an action plan that should involve response, recovery, and growth.When the pandemic began hurting the economy, insurance companies responded by taking steps, ensuring business continuity and helping customers and communities cope with it.

In 2021, insurers need to have a long-term strategy to accelerate their recovery efforts and to make a transition to the growth phase, despite economic challenges.

According to a study by Capgemini, the following trends will be prominent in the health insurance industry:

The survey further stated that the cost of health care would continue to increase significantly. The medical inflation was about to increase by nearly 7 percent before COVID-19. Besides, increase in the aging population and increasing chronic conditions will add up to the overall cost.

The survey has also forecast that customers may prefer omnichannel service for buying insurance (in-person, via the company website, mobile phone, and social applications). Nearly 75 percent of policyholders responded that they might switch to another insurance provider for smooth service and flexible coverages. If you are looking for better insurance options, it is ideal to consult a leading and local insurance broker.

Even governments and regulators are modifying compliance mandates in the areas related to transparency and data interoperability. The US Department of Health and Human Services has already set new standards to improve data sharing between health IT systems and interoperability.

Again, Deloitte’s third quarter for the US economy shows that there could still be a significant economic slowdown throughout 2021. Considering this, insurers in the US and across the world, are exploring strategies to ensure that their foundation stays strong regardless of the economic adversities. In that pursuit, insurers are planning to invest in the areas of technology, operations, human resources, and finance. More insurance companies are likely to focus on minimizing human error by providing 24/7 customer service via chatbots. Besides, smartly programmed chatbots will offer up-to-date and accurate information based on customer inquiries. To reduce operational expenses and human errors, there would be more robotic process automation (RPA). By using RPA, insurers aim to streamline tedious processes and transactions such as claims processing and document verification, and claims processing with minimum errors.

Finally, the implementation of virtual collaboration systems through digital applications will help boost online sales with lower customer acquisition costs. There will be more online interactions between the insurance teams and customers, such as teleconferencing and video calling. There will also be lesser dependence on physical files and manual document maintenance.

Before We Go

Despite the gloomy economy due to the pandemic, there is a brighter side too. Because of the lockdown and other social distancing restrictions, the demand for digital transactions like insurance policies have significantly increased. Since customers are cautious about meeting an insurance broker in person, buying insurance online without having to compromise on conventional health insurance benefits seems a safer option.

If you live in California, we can help you by providing detailed information on the best insurance policies available. We are a local insurance broker and have been providing full-service insurance brokerage since 1954.

We can help you out with the many insurance options offered by leading insurers in the US so that you can decide on the best one for you. Get a free insurance quote by filling out this online form or dial our toll-free number 1-888-505-7988. Allow us to help you get insured!