2023 – it has been a year in which geopolitical turbulence and economic disruption have dominated headlines, and granted the insurance market multiple opportunities to display its inherent resilience. Now, with 2024 looming on the horizon, what better time could there be to take stock of all that 2023 brought to and for the insurance industry?
Touching on some of the economic considerations at play Stephen Bramall, credit director for Allianz Trade UK & Ireland, highlighted that 2023 was a year that saw credit risk return to our markets. The government support measures that were in place through the COVID period are running off, he said, inflation has been high and the effects of the raising of interest rates have started to affect demand.
This has resulted in a sharp rise in business insolvencies, Bramall said. From Allianz Trade’s internal data, it is seeing higher levels of payment issues and disputes and he expects to see this continue into 2024. Meanwhile, on the supply chain side, the market has seen significant disruption as a result of several conflicts between key countries.
“With higher insolvencies and tighter financial conditions we have seen supply chains come under pressure,” he added. “When we speak to businesses, disruptions in the supply chain remain one of the key risks faced. We expect these issues to continue moving into 2024.”
Offering his insights into what he has seen dictate discussions this year, Jon Walker, commercial CEO at AXA UK, noted that 2023 was a challenging year for the insurance sector with claims inflation and supply chain issues dominating.
“However, it also provided opportunities such as the introduction of Consumer Duty that reinforced our commitment to deliver exceptional service to our customers,” he said. “We ensured and will continue to ensure our teams were and are equipped to meet or exceed the standards it sets, many of which were already in place.”
Walker added that claims inflation impacted both motor and property insurance throughout 2023. Across the industry, he said, supply chain challenges caused issues with motor claims and increases in the cost of building materials and labour contributing to property claims costs rising.
Underinsurance remains a challenge that the insurance industry must face, he said, to ensure that customers are well informed and experience no unexpected issues should claims arise. Proactive communication has been and will continue to be crucial to keep customers informed and help them understand the macroeconomic issues impacting some services.
“Our ambitious programme of business transformation continued at pace throughout 2023 and was central to all our discussions,” he said. “By continuing to introduce automation and enriching our data, as well as losing unnecessary admin and simplifying complex processes, we aim to deliver our ambition of giving businesses the confidence to thrive, today and tomorrow.”
For Rich Tomlinson, MD of Percayso Inform, real time data and the ability to predict customer behaviour were two critical areas this year. Since the firm acquired Cazana at the beginning of the year and created Percayso Vehicle Intelligence, he said, it has experienced significant engagement not just from existing customers but new brokers and insurance providers.
“The partnership we formed with Close Brothers has led to a lot of conversations about how brokers can benefit from a cancellation model that predicts those consumers who are likely to cancel their insurance early or mid-term,” he said. “Brokers want to understand what makes their customers tick and being able to pin down their likelihood to buy, cancel, in essence, their lifetime value is vital to maintaining profit margins, reducing fraud and pivoting business models as the economic environment changes.”
Despite the challenging external environment, good news was in no short supply during 2023 and Walker spotlighted the further improvement seen across all AXA Commercial’s business performance metrics in 2023, and the step change in its market visibility between appearances at BIBA, the MGAA Conference, and brand, broker and partner events.
“Our people are keen to get out in the marketplace and promote our products and services,” he said. “We’re also incredibly proud to have received the Investor in Customers gold award this year, the highest standard awarded by ICC to businesses, demonstrating that our commitment to service is being recognised and appreciated.
“But it’s not only customers who have voiced their approval. AXA’s eNPS score has seen a significant improvement, highlighting our employees’ increased job satisfaction and likelihood to recommend us to others as an employer.”
Across the sector, he said, business optimism is slowly returning despite the ongoing challenges presented by COVID-19, the cost-of-living crisis, adverse weather and geopolitical events, and his team are starting to see more customers expanding their operations. This is especially positive considering that fundamental economic stability and business optimism are the lifeblood of the UK insurance sector.
Looking to some of the key successes enjoyed by Percayso this year, Tomlinson paid credit to the whole team who have worked so hard to help the business achieve its aim for 2023, but said two achievements stand out most for him. The first is Percayso’s second successful investment round led by the former chairman of Hastings, Neil Utley, and its existing VC, Praetura, as well as other industry heavyweights such as Andy Homer and David Rasche.
In what is a challenging environment for many when it comes to raising funds, he said, the fact that Percayso was able to secure their interest is a huge testament not only to the value that the business is delivering to insurance providers but also its commitment to generating positive outcomes for clients.
“Secondly, we recently achieved ISO 27001 certification,” he said. “I appreciate this may not sound that exciting but as a business that manages literally millions of different bits of data every day, achieving this global standard for effective information management demonstrates to our customers, partners and investors that we are doing all we can to protect the data we hold and manage.
“Both of these achievements involved massive team efforts and both are hugely important to the future direction of our business. I couldn’t be prouder of everyone involved.”
