London, December 5, 2023: High reinsurance costs and the ongoing impact of claims inflation will force insurers to redefine their business models, underlines the Sollers Prediction Report 2024. Companies will increase their efforts in process automation. To prepare for that, the implementation of cloud-based solutions and the development of data management will be a major focus in insurance next year.
In 2024, insurance companies will have to deal with the impact of claims inflation for the second year in a row, underlines the Sollers Prediction Report 2024 “Against the Wind”. Unusual weather patterns and an increased dependency on reinsurance will add to the financial pressure as reinsurance costs remain elevated. To respond to that, operational efficiency will become important. As the industry prepares for the use of Artificial Intelligence, companies will focus on data management and cloud. EU legislation and the London Market modernisation through Blueprint II will support data-driven business models.
“Artificial intelligence is about to fundamentally change the insurance business. But to utilise it, insurers need to invest in their IT infrastructure”, says Niels Zijderveld, Chief Sales Officer at Sollers Consulting. “Insurance companies will expand their strategies to reduce claims costs and focus on cost-efficient models through automated distribution and underwriting.”
UK insurers will increasingly introduce cost-effective insurance models, such as embedded insurance. Legislation on autonomous vehicles will only provide a partial solution in terms of insurers’ access to vehicle data. With inflationary pressures to remain high, it is likely that more insurers will reduce their activities in motor insurance.
“The cloud will play a dominant role in IT projects to achieve a higher degree of automation”, comments Piotr Łakomski, Managing Consultant at Sollers. “UK insurers will move to the cloud to prepare for innovation and, as a result, will be able to offer cost-effective customer services.”
2024 will be characterised by intense activities of Lloyd’s syndicates and London Market insurers to adopt Blueprint II, with application programming interfaces playing a pivotal role. Lloyd’s and London market insurers are set to adjust their data models and communications systems to the requirements of the Core Data Record set through Blueprint II.
“There is a strong trend towards integrated underwriting solutions that enable insurers in the London Market to rationalise underwriting and process data more efficiently”, comments Jakub Wróblewski, UK London Market Lead. “Underwriting Workbenches that help to integrate various data sources are expected to become more popular.”
Next year, many markets will be characterised by a growing regulatory and political influence on insurance as elections will be held in the US and most probably in the UK. The EU is likely to speed up its efforts to create legal frameworks for data usage and artificial intelligence. These will have a direct impact on the insurance industry. The Sollers Prediction Report is based on economic data and talks with insurance industry executives and professionals in 15 markets across Europe, America and Asia-Pacific.
The Sollers Prediction Report 2024 “Against the Wind” can be downloaded here: