2022 outlook for life and health insurance sector

The workplace, as we know it, has changed dramatically since the onset of COVID-19, which continues to accelerate digital transformation initiatives, especially among those companies in the life and health insurance sector, necessitated by the mandate to meet new and increasing customer demands.

Simultaneously, we are witnessing the “Great Resignation,” as employees contemplate their current work status and make major decisions about their future career choices. HR benefit managers as well are overwhelmed by the sheer enormity of confusing policies, portals, etc. But, what if all lines of business were available in the same place? What if they were portable and available simply with the flip of a switch? This is where workplace benefits are headed in 2022.

Given the current landscape, I see four major trends shaping the life and health insurance sector in 2022 that will most assuredly dictate the ability of carriers to remain competitive, even viable.

1. New offerings for today’s “new” employee

Today’s workers want flexibility, the opportunity to save, and, in many cases, the chance to work for themselves as individual contractors or “gig workers.” By doing so, however, a great many of these self-employed individuals will no longer have access to corporate or group benefits.

This new normal has presented companies with a major conundrum regarding how they can not only compete, but actively recruit and retain talent, offering the flexibility to allow employees to work from home while enticing the same with attractive NEW benefits that will allow them to save.

In 2022, the provision of expanded employee benefits, and highly personalized products that have never been offered before such as pet insurance, student debt coverage, annuities, and auto or home/renters insurance will allow employers to be more competitive and attractive to prospective or current employees or those on the fence. Millennials are all about saving and these non-traditional benefits will indeed be highly attractive to these employees and meet their mandate of affording them the opportunity to save more.

2. The rise of coretech

In 2022, insurers will need to focus on enhancing their technology if they want to stave off the competition, especially from agile insurtechs. To be best prepared for the “unexpected” and to swiftly accommodate continued market changes and challenges, insurers need to be equipped with technology that is flexible, open, able to support rapid integrations across various lines of business, and, most importantly, be customer-centric.

Over the past few years, insurance companies have invested heavily in insurtech. For insurers, the advantage of partnering with insurtechs is that they can supplement their existing product portfolio or simplify internal operations in a fast, low-cost way without having to build the internal expertise or applications themselves. Insurtech to date, however, has delivered transformation on a relatively small scale via standalone projects or point solutions, and continuing to innovate in this one-off, loosely connected manner will eventually become too difficult to manage.

To capitalize on its full potential, insurers must connect insurtech to their core business which will provide a solid base that will grow with them. However, most insurers have legacy systems not designed to accommodate the same. What is needed is a new breed of cloud-native microservices and API-based core systems, or “coretech,” that are customer-centric by design. With coretech, insurers can seamlessly integrate insurtech solutions into their operating systems to reap their full potential.

Insurers will quickly ramp up their adoption of these solutions in 2022. Coretech has the ability to empower the new ecosystems that bring together core operations and insurtech innovation which equates to extreme value.

3. Emergence of customer-centered ecosystems

Consumer needs have changed and no one company can meet all of their requests. Insurers have historically taken an “outside-in” perspective in determining how they can best fit into consumer ecosystems. However, as we approach 2022, insurers are moving towards a customer-centric perspective in order to create better, more personalized experiences that support the myriad of consumer needs.

Because no single partner needs to build and orchestrate all the components, the ecosystem approach accelerates innovation — with one company’s innovation efforts furthering all others. To capitalize on their full potential and succeed with ecosystems, incumbent insurers must fully connect insurtechs to their core business. To do so, insurers need to create a new breed of technology platform; one that is capable of quickly connecting, disconnecting, and reconnecting with other systems, platforms, and partners. These coretech platforms will enable continuous reformulating of ecosystems as customer needs, expectations and preferences evolve.

4. The convergence of life & non-life lines

2022 will be marked by the convergence of Life & Health and Life & Wealth. We will first see a convergence with Workplace benefits which will then trickle out to Life & Health. This convergence is all about transparency, protection and providing the one-stop-shop experience today’s consumers are actively seeking. It offers a holistic picture that allows consumers to know they are insured, covered, and protected.

In 2022, insurers will make a sustained effort to broaden their product portfolios, as mentioned above, to become more “sticky” with consumers. They will place increased focus on simplified buyer journeys that make data-driven supplementary product/service offers that are attractive to customers and drive revenue growth and customer loyalty. Retention is increased with each additional product customers buy. Full-stack insurtechs, such as Lemonade, and leading incumbents are pursuing this model vigorously and with great success.

In summation, we are facing challenging times in the Life & Health Insurance sector and the hurdles which confront us now show no sign of letting up. That said, there are a number of prophylactic measures carriers can undertake NOW to ensure that they remain viable, even profitable, as we approach 2022. Those insurers that successfully navigate the transition to digital ecosystems will be the ones that will remain competitive in this new normal. They rightfully see this transformation as not only an investment in their own future success but, more importantly, successfully meeting the evolving needs of their valued customers.

Samantha Chow is global market lead for Life, Annuity, and Health at EIS, an insurance software company that enables leading insurers to innovate and operate like a tech company: fast, simple, agile.