The Big Question December 2021: What is on the insurance sector’s wish list for 2022?

Nick Hobbs, chief distribution and regions officer, Allianz

On my wish list for 2022? A dull year and recovering the ability to extol the virtues of insurance as an enabler of great business in the UK.

The past two years have been eventful and the industry has shown its capacity to adapt fabulously to new circumstances - as well as to disappoint.

We’re looking forward to catching our breath and leading the agenda rather than reacting to it.

If surprises do come though, we’ve proven that we are able to respond to most of them. With the economy re-emerging, insurers are ready to play their role in supporting new ways of working, trading, travelling and living.

On that note, we are looking ahead to a strong 2022 at Allianz Commercial. We are stepping up initiatives to develop our etraded SME business, enhancing our claims propositions and supporting our broker partners.

We also have ambitious targets in terms of our specialist propositions, including products that help UK companies respond to the climate emergency. For us, 2022 brings innovation and sustainability even closer together.

Daniel Lloyd-John, chief executive, Broadway Insurance Brokers 

Any movement within the industry during 2021 was naturally going seem dizzyingly quick in comparison to the previous 12 months. However, few would have expected such a pace of change on so many fronts.

There was what I would describe as a generational shift. We had watershed decisions by the Supreme Court and FCA, plus considerable M&A activity as well as a continuing pandemic. Anyone expecting to breathe more easily during 2022 is, I reckon, going to be very much mistaken.

The latest stage of the FCA’s pricing rules take effect on the very first day of the new year.

In 2022, we will also discover the true impact of this year’s acquisition and integration work, with a reconfiguration of major players and the consequent rationalisation of resources - human and otherwise.

Expect to see brokers being very energetic when it comes to recruitment as a result - not everyone will be happy with what change means on a personal level.

Small, nimble startups will also seek to capitalise on opportunities to disrupt the sector - these always seem to be created by any shake up involving the larger firms.

Customers will be wondering what all this change means for them too. Dropping standards and losing sight of our obligations to them in a more fluid market may only serve to prolong a period of uncertainty and anxiety.

Andrew Yeoman, chief executive, Concirrus

I would have three things on my wish list for 2022. Firstly, I’d wish for new and imaginative products and routes to market that offer better risk profiles and a lower cost of acquisition.

Secondly, I wish to see breakthroughs in technology and business processes that facilitate an improved level of operating efficiency.

No one can deny that our market knows how to write business – knowledge and expertise isn’t the issue. What the market needs to do - at pace - is acquire customers on a more cost effective basis and operate the business at a reduced expense ratio. This will allow incumbents to compete with new, digital market entrants on a level playing field and deliver more sustainable businesses for the future.

Lastly, I wish digital transformation would move from Microsoft PowerPoint and actually into the market.

Gary Humphreys, group chief underwriting officer, Markerstudy 

The insurance sector is bracing itself for the new dawn in personal lines motor and home pricing practices following the FCA’s general insurance pricing review, which was initially published in September 2020.

The new regulations coming into force from the start of 2022 have created a large degree of uncertainty around the sector’s ability to predict pricing. The effect on customer behaviours across these markets is also unknown.

The industry would love to have a period of stability, with no further regulatory shake ups, to enable things to settle down and to ensure that the changes are indeed delivering the better customer outcomes that the FCA and market practitioners want to see.

Regulatory changes are expensive, especially when undertaken on this scale across the whole market, and come with a significant resource requirement to establish the appropriate monitoring and supply of data.

While a new year’s resolution for no further regulatory changes in 2022 may be too much to expect, we hope Santa will look kindly on the industry. 

Stuart Reid, chairman, Partners&

I have recently heard a lot about the hard times many within the industry have had - both personally and as businesses - over the past couple of years. We should take heart that our industry has been so resilient.

But strong headwinds are coming, not least the significant change that the FCA’s rules on fair value will mean to us all. While applauding this principle, do not forget that the vast majority of brokers in the UK are small businesses and the impact of this change will be significant. Patience, understanding and some uniformity of data collection would go a long way to make this change a success.

On a more personal note, it would be great if we could all remember where we were before the Covid-19 pandemic hit. Personal interaction between us all, when it is safe and when those attending feel safe, is an imperative to personal and company growth. It can also be great fun.

Steven Wallace, managing director for UK and Ireland, McLarens

Our profession is reinventing how it collects and distributes data, improving the speed and quality of response as well as, ultimately, the outcome for both policyholders and insurers.

For some, such as our business, this is already a strategic priority. By converting the wealth of data at our disposal into accessible and manageable formats, we can inform strategic thinking and impart quality insights into underwriting and claims modelling. Significant investment in data will continue for many because the race is on across the industry for digital and data superiority.

The issue of climate change and the responsibility that we all have to protect the environment also remains a priority, both in terms of extreme weather events and related risks.

We will see a continuation of the momentum from the 2021 United Nations Climate Change Conference (COP26) and the excellent resilience and sustainability claims initiatives which now have real traction – we have undoubtedly had a wake up call and 2022 will, I sincerely hope, produce some great groundwork around meaningful carbon reduction progress.

Charlotte Clark, director of regulation, ABI

The reform of financial regulation has never been more important as we adapt and adjust to our post-Brexit world.

Reform is essential to ensure that our world-leading insurance and long-term savings industry is best placed to meet challenges, seize opportunities and is a key part of the UK’s economic recovery post-Covid. This is why having a regulatory regime that is fit for purpose will be high on our list of policy priorities for 2022.

The government’s commitment to reform Solvency II is welcome.

Analysis has shown that up to £95bn could be freed to boost the UK economy and help tackle climate change if the appropriate reforms are made to Solvency II.

It is now clear that the options in the Prudential Regulation Authority’s (PRA) Quantitive Impact Study (QIS), which was launched in July 2021, would not achieve the government’s objectives here, so we need to ensure that an approach is decided which allows this regulatory opportunity to the be taken without undermining policyholder protection. Our priority will be working with HM Treasury and the PRA to come up with such a package.

The right regulation will stimulate economic growth. This is why a growth and international competitiveness objective must be a primary objective for the regulators and, not as it currently stands, act as only a secondary objective for the PRA and FCA.

We have a unique opportunity to boost competitiveness, tackle climate change and promote the UK as a world-leading financial services hub, with strong policyholder protection at its heart.

During 2022, the ABI will be pushing hard to ensure our regulatory regime has all of these goals in mind. 

James York, founder, Worry+Peace 

Here’s to a buoyant economy and investment confidence in insurtechs staying high in 2022.

In terms of my wish list for next year, perhaps some gentle reform to usher in a fintech-like challenger movement for capacity?

Lots of startups hold appointed representative (AR) status, which is justifiably under FCA review. Insurtechs trading as a non-advised, single-class delegated underwriting authority (DUA) seem really suitable for AR status as a start point. Many will be hoping regulatory pragmatism reigns.

Around 99% of startups survived the Covid crunch - we can expect organic maturation of open insurance systems as application processing interfaces (APIs) find use cases across functions and models.

Strategically, we’re still one sector, so I’d really like to see more aligned conversation across the sector about our collective reputation - how we can nurture and rehabilitate it.

The FCA’s price walking reform could have a slight impact on buyer habits - time will tell. To date, it’s felt a lot like cost, cost, cost. Perhaps cost, cover and claims is a more sustainable goal?