Challenges on the horizon

Unfortunately, the potential impact of new COVID-19 variants on economic recovery was just one of several pressing challenges cited that could undermine the industry's growth momentum. These challenges include:

Inflation: Supply chain disruptions and rapid increases in demand for construction materials, auto replacement parts and labor have been driving claims costs higher for personal and commercial property losses, with no letup in sight. If rising loss costs persist, that trend could cut into bottom-line profitability as well as prompt further premium increases in the already hardening personal- and commercial-lines markets.
New regulatory expectations: Insurers are facing additional oversight in a host of areas with environmental, social and governance issues topping the list. For example, while an array of stakeholders are seeking greater disclosure about the risks of climate change and the status of action plans to address them, only one in four of Deloitte's survey respondents in finance roles indicated they had finished quantifying metrics on climate risk in their books of business, while fewer than one in five had accomplished this in their investment portfolios. The spotlight also is on insurers when it comes to diversifying their workforce and leadership as well as providing more equitable access to coverage in underserved communities.
Talent: While insurers had to change their talent model virtually overnight to enable a remote workforce when the pandemic hit in the spring of 2020, carriers are now grappling with the implications of that reinvention. Indeed, Deloitte's outlook report cites the ability to retain and attract the right talent in a more virtual workforce as perhaps the greatest challenge facing insurers in 2022 and beyond. While the vast majority of those surveyed by Deloitte expect to maintain a hybrid system, questions abound about when (or even if) employees should be asked to return to the office — and if so, under what conditions? Meanwhile, the competition for talent will likely keep intensifying — particularly for those in technology, data analytics and cybersecurity. The shift to a more remote workforce could also greatly expand an insurer's recruiting options since new hires may no longer need to be within commuting distance of a headquarters or satellite office to be considered viable candidates.
Technology: Deloitte's global survey respondents expect technology budgets to rise an average of 13.7% in 2022, with the biggest boosts likely to come for artificial intelligence, cloud, data privacy, data acquisition/processing and analytics. On the flip side of added technology and data, two-thirds of respondents said they would be increasing cybersecurity budgets to fortify a more vulnerable remote workforce infrastructure, protect against the rising threat of ransomware attacks, and address new oversight requirements being implemented by domestic and global authorities.

Deloitte's outlook also suggested a potential shift in marketing priorities as a growing number of consumers cut the cord on traditional media and seek additional self-service options, while the proliferation of risk-monitoring sensors is likely to spur development of more flexible and customized product offerings. Opportunities were also cited to bolster overall trust in the industry by helping close coverage gaps exposed by the pandemic and increasingly frequent natural catastrophes.

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Insurers generally bullish about growth in 2022

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