In the US, there are two main categories of insurance — life/health and property/casualty. Under these categories, there are various types of insurance products. For the life/health category, you’ll find plans for dental or vision needs, long-term care, and accidental death, among others. Meanwhile, for the property/casualty category, plans usually cover vehicles, homes, pets, and negligent acts or omissions. Simply put, in the insurance industry, products aren’t limited to only these four types; the right plans also vary depending on the person’s specific needs.
Insurance Industry Trends 2023: Growth, Stats, and Forecast
Last modified: March 5, 2023
Welcome to the future of insurance — where getting quotes is as simple as clicking a button; managing coverage can be done via a mobile app; determining a policy premium depends on monitoring devices, and so on.
In the past few years, we all saw how ripe the insurance industry was for disruption. Although new technology has already been introduced to the market, not everyone was able to adapt to the tech-driven shift. Some insurers made an early move to use advanced tools and it’s only a matter of time before they reap the benefits of their labor.
In 2020, we can expect tech-infused insurance processes to become more commonplace. Because, in truth, the insurance industry trends show that the only way we’re going is forward.
No matter if you’re the insurer or the insured, we have the latest insurance data, statistics, and trends to give you a better grasp of what’s ahead. Let’s dive right in!
Top Insurance Trends and Stats — A Quick Look
- The property and casualty sector remains the biggest insurance sector in the US.
- Prudential Life is in the lead with $800 billion in assets in the US.
- The global life insurance providers market is forecasted to reach $3.6 trillion by 2023.
- 69% of consumers would attach a sensor to their car to lower insurance premiums.
- By 2025, 95% of all customer interactions will be powered by chatbots.
General Trends in the Insurance Industry
1. The property and casualty (P&C) sector is the biggest insurance sector in the US.
(NAIC)
This doesn’t come as a surprise as, since 2018, the P&C market’s net income has been soaring. Currently, it’s sitting at $58 billion, up from $39 billion in 2017. A 10.5% boost in net premiums was a contributing factor to the market growth alongside the $3 billion underwriting gain.
2. Insurtech partnerships are on the rise.
(J.D. Power)
According to J.D. Power, customer-focused digital solutions will be brought on by strong partnerships between traditional carriers and startups. Aside from providing better customer experience, these partnerships should also help insurers in cutting costs and improving business process efficiencies.
Companies like American Family and Nationwide already forged partnerships with insurtech startups, establishing a more collaborative industry in 2020 and beyond.
3. Mobile apps are changing the insurance account servicing landscape.
(J.D. Power)
The same report shows that 74% of insurance companies are using a mobile app, allowing policyholders to access and manage their policy and claims information on the go.
Interestingly, customers who used mobile apps had a more satisfying experience than those who used desktops or mobile browsers to interact with their insurance companies. As we move further along into the digital age, this is one strong digital insurance trend to prevail this year and in the near future.
4. 68% of young insurance agents believe that the industry is too slow to adapt to new technology.
(Statista)
Regardless of how progressive the previous stat was a booming 68% of young insurance agents think that the digital transformation of insurance companies is too slow. This stunted digital maturity might be due to a lack of resourcefulness.
The recent trends in the insurance industry are urging companies to deliver advanced self-service tools and integrated digital communications to keep up with the leading websites in other industries.
5. Prudential Life is in the lead with $800 billion in assets in the US.
(Statista)
In 2018, Prudential Life was hailed as the top insurance company in the US. On a global scale, the company has over $1 trillion of assets under management as of September 2019. Berkshire Hathway, who secured the second spot with $708 billion of assets, may take the lead in the future.
Life Insurance Industry Trends
6. The life insurance premiums only had a real growth rate of 0.2% in 2018.
(Capgemini)
This isn’t good news for life insurance companies. The industry is changing and this stat shows that everyone involved should keep up. Exploring new customer segments such as the gig economy and Millennials is one way of breathing new life into premiums.
7. The gig economy could be a viable source of profit for the life insurance market.
(Capgemini)
As mentioned above, gig economy workers are among the emerging customer segments today. Typically, they don’t have access to group benefits and this is something that life insurers can attend to.
8. There’s a huge coverage gap in life insurance for Millennials.
(New York Life)
In the US, only 10% of Millennials have a life insurance policy in place. This translates to a 78% coverage gap for insurers to fill. Surprisingly, Millennials seem to be financially confident despite having the least amount of insurance coverage.
9. The days for a single business model for insurance are over.
(Peer Insight)
Insurance industry growth trends show that a multiple-business model will thrive this year. For instance, major players like Allstate operates their traditional offerings while delivering online insurance products via its subsidiary Esurance. MassMutual is also making the same impact by operating its wholly-owned startup, Haven Life.
10. The global life insurance providers market is forecasted to reach $3.6 trillion by 2023.
(AP News)
This market includes the sale of life insurance policies. In 2018, North America was the largest region to drive market growth, followed by the Asia Pacific. Currently, the lack of awareness about complex insurance products restrains the full growth of the market.
Auto Insurance Industry Trends
11. 69% of consumers would be willing to have a sensor attached to their car if it would lower their premiums.
(PwC)
Based on a PwC survey, a large portion of the customer base is in favor of using car sensors, particularly if doing so would help them cut costs. This kind of innovative technology could also help the auto insurance industry extend coverage into untapped markets, making policies and premiums much more affordable for everyone.
12. Claims management and policy serving will be automated with the help of AI bots.
(Augusta Free Press)
Artificial Intelligence (AI) has the power to enhance data processing capabilities. When the AI algorithm is merged with automation, we get faster car insurance claims powered by streamlined and automated processes.
In terms of automation, Erie Insurance and Allstate are leading the way as they already started using drones for automated vehicle inspection.
13. 88% of consumers demand more personalized insurance products.
(Accenture)
Consumers are now used to getting customized solutions and the auto insurance industry is no exception to this trend. From messages and pricing to recommendations, most insurance customers are looking for personalized offers to meet their needs.
14. Digital Insurance distribution channels are evolving.
(Accenture)
The use of multiple distribution channels is becoming more important for the industry given that it increases market reach. Direct-to-consumer online channels are also prevalent, eliminating the hassle to get car insurance. Of course, traditional direct channels are not going away anytime soon and that signals some positive insurance brokerage industry trends.
Alongside this, review websites, such as ours, are increasing in number as well. Although most of these websites are not directly linked to insurance companies, they help with the initiative to make insurance shopping much easier.
15. Auto coverage will likely shift its focus from individuals to vehicles.
(KPMG)
Based on recent trends and the rise of self-driving cars, auto insurance coverage may move away from insuring drivers to insuring the vehicle itself. A possible alternative is that auto insurance will split into two — third-party liability coverage and separate coverage for the vehicle against damage.
Property and Casualty Insurance Industry Trends
16. State Farm Group leads the P&C market with $65 billion direct premiums written.
(Agency Checklists)
With $65 billion direct premiums earned/written and 9.76% market share, State Farm Group continues to dominate the market. Berkshire Hathaway, the owner of GEICO and several specialty insurers, takes second place with $43 billion direct premiums written and 6.50% market share.
17. The US P&C insurance market has roughly 622,000 employees in 2018.
(Statista)
Fortunately, P&C does not only affect the lives of consumers but those who are seeking insurance jobs as well. As the market grows, it would need more people to deliver sales and improve revenue.
18. Near real-time data will propel the growth of P&C insurance companies forward.
(Peer Insight)
By using wearables, smartphones, smart meters, and drone data capture, insurers should be able to handle policies and claims much better, as the latest insurance industry trends suggest. For instance, drones can get into disaster zones quickly and generate accurate data for property claims. This idea has already been put into practice by startup Geomni in Lehi, Utah.
19. By 2025, 95% of customer interactions will be powered by chatbots.
(Duck Creek Technologies)
Chatbots, the love-child of AI and machine learning, can interact with customers, assisting them with policy application or claims process. GEICO’s “Kate” is one great example of this new technology. Following this trend, digital insurance experts believe that chatbot capabilities will continue to prevail in 2020 (and beyond).
20. Hyperlocal weather and climate data and analytics will be utilized to improve insurance pricing.
(CB Insights)
Climate and weather forecasts remain a risk factor that P&C insurers consider when operating in various areas. Through AI and traditional approaches, they hope to finally eliminate this risk.
Travel Insurance Industry Trends
21. The US travel insurance sector is expected to increase by 1.2% in 2020.
(IBIS World)
Between 2015 and 2020, the travel insurance sector grew by an average of 1.9% per year. As such, a decline in industry growth may be visible in 2020.
22. International trips are the biggest opportunity for growth in the travel insurance sector.
(IBIS World)
It is now safe and less costly to travel inside or outside the US, thanks to the advancements in aircraft technology. If the number of US residents traveling internationally (be it for leisure or business purposes) increases, the travel insurance industry will have a bright future ahead.
23. Trip cancellation/interruption is the most popular travel insurance benefit among consumers.
(US Travel Insurance Association)
In 2018, policies with trip cancellation/interruption benefits were responsible for 90% of travel protection products sold. Other benefits that may be viable for the consumers this 2020 include lost luggage, medical evacuation, and emergency medical programs.
24. Over 66 million people in the US are protected when traveling.
(US Travel Insurance Association)
These travel insurance industry trends mark an increase of 49% from 2016. What’s more, these people are protected by more than 46 million plans provided by travel insurance carriers and allied businesses.
25. 64% of travelers are considering taking their family on business trips.
(California Broker Magazine)
So what does this insurance trend tell us? Well, for insurers, this provides an opportunity to offer multi-individual or multi-trip policies. Travelers taking these new offerings wholeheartedly means a renewed interest in safeguarding travel investments.
Insurance Outlook for 2020 and Beyond
As insurers adapt to new business models, customer segments, and new technology, the industry’s best days are ahead. Here are the key takeaways to keep in mind:
Gone are the days when insurers relied on only one channel to distribute products. From insurance suppliers/brokers to online media, all of these will be utilized to establish financial literacy and security. Still, watch out for insurance challenges.
Consumers are aging and it’s important to study what their exact needs are to provide customized solutions. This should also pave the way for more customer-centric experiences.
And finally, the advanced technology commonly referred to as the “disruptor,” will be the enabler of growth once it’s embedded into the new and improved insurance business models.
Of course, there will always be obstacles but we should not expect a return to the industry’s old ways. As mentioned at the beginning of this article, the only way we’re going is forward.
FAQs
What type of industry is insurance?
Insurance can be classified as a commercial enterprise that is a major part of the financial services industry. The insurance sector is comprised of companies with one focus — risk management. However, they do not offer the same products.
How does the insurance industry work?
Insurance protects individuals (policyholders) against uncertain future events through insurance contracts. The insurers will guarantee payment to secure the policyholders’ financial situation during unfortunate events. In exchange for this protection, policyholders will have to pay a certain amount of money (premium) to the insurer.
How much is the insurance industry worth?
In 2017, the industry’s total net premium was $1.2 trillion. 52% of these premiums came from life and health insurance sectors while property and casualty insurers accounted for 48% of the pie.
Is insurance a growing industry?
Yes, especially now that people are becoming more financially conscious and vigilant of risks. By 2023, the global market of life insurance providers alone is expected to reach $3.6 trillion.
What are the 4 types of insurance?
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