The B2B insurance industry model has witnessed changes of high magnitudes since the dawn of the pandemic, with changing customer expectations, unstable market conditions, and insurtech innovations.
While these forces have been transforming the insurance industry, amidst these challenges, the B2B insurance industry has shown considerable growth in the past two years. During a game-changing era of challenges and recession, B2B insurers have found opportunities to prepare the insurance industry to fly high in the coming decade.
With the insurance market size estimated to reach $222 billion by 2026, the insurance industry is reaching new heights and accruing value with a ‘digital first’ approach that has the potential to unlock value worth billions of dollars.
In this article, we’ll look at the analytics and trends of the B2B insurance industry in 2022 to have a comprehensive understanding of where the B2B insurance industry stands in the current market. First, we’ll look at the analytics, then move on to the trends that have shaped the industry.
2022 insurance industry analytics:
1- Increasing insurtech investments
With a ‘digital first’ approach rapidly spreading across B2B insurance industries, insurance technologies (insurtechs) have significantly transformed the conventional B2B insurance model. With an increase in investment in technology from $1 billion in 2004 to above $14.6 billion in 2022, 40% of insurtech is directed at marketing and distribution prospects to address the customer’s pain points.
With key players in the insurance industry, such as Zurich Insurance Group, Prudential plc, and Munich Re Group digitizing and making their client experience better, the entire insurance market is driven towards AI and innovation on the technological front.
2-Brokers are the game changers
A survey by McKinsey & Company has shown that brokers have produced up to 53.4% returns within 2020-21, establishing themselves as absolute winners in the B2B insurance value chain.
By adopting a healthy client relationship model backed up by client-oriented digitization, B2B insurance brokers have a high shareholder value compared to other industry segments.
Not only this, but what’s more interesting is that PE-backed brokerage deals in the US have accounted for three-fourths of all insurance transactions that took place between 2016 to 2019. This ratio saw a spike in the past two years, shifting the value towards intermediaries.
3-Reduction in productivity improvement
Digitization may have eased the post-pandemic situation for B2B insurance brokers and some B2B insurance companies. Still, the overall production graph hasn’t improved for the B2B insurance industry in the past decade.
Due to low-interest rates and the slaughter of the recession, most B2B insurance companies are still struggling to sustain growth and meet their cost of capital. This has called for a structural model to foster productivity and profits.
4-Decreased revenue growth
Revenue growth has taken a brutal hit in the B2B insurance market in 2022. While the insurance markets witnessed a profit rebound in 2021, as estimated by preliminary reports, the revenue growth in most parts of the world has seen a falling curve.
This decrease in revenue growth is primarily due to the following reasons:
Persistent low-interest rates
The implementation of insurance technologies to cater to B2B clients has been possible in developed economies due to considerable capital and resources; however, this also indicates that the insurance industry could risk its relevance over time.
The analytics report of the B2B insurance industry shows that the obstacles run deep for B2B insurers, as they hover over a plethora of what ifs and how, such as: How can they increase productivity on a long-term basis? How can they bring in more value for shareholders?
However, with the right approach and updated models, B2B insurance agents can upend the insurance industry in the upcoming years, benefiting both policyholders and insurers.
Let’s look at the 2022 B2B insurance industry trends to see how the insurance companies have their strategies in place to scale the growth of B2B insurance companies:
2022 insurance industry trends
1-New world solutions
Not only have the client trends changed for B2B insurance agents, but the gradual incorporation of technology has also altered client expectations. With a client base native to digitization and customized policies comes the need for a ‘digital first’ approach that nourishes the client-agent relationship.
With the onslaught of comparison sites, ratings, and instant gratification options, B2B clients are more selective about their insurers. Hence, the insurance industry has made it a top priority to digitize its customer-facing operations to provide an enhanced customer experience.
With Artificial Intelligence (AI) and Application Programming Interfaces (API) in place, B2B insurance firms are driving client insights and trends that will help them estimate the risks involved and value to provide a customized solution and increase their brand value.
A survey by Deloitte estimated that 33% of the premium insurance value in 2024 will be channeled from newer propositions, which ascertains the need to have digitized operations in place to grow and earn a competitive edge. The core idea is to simplify the customer’s journey by implementing methods that address the pain points and meet the capital cost.
2-Making ESG considerations a priority
With new B2B insurance companies cropping up daily, insurers that strategize their business model can keep their heads up in this competitive market. By making environmental, social, and governance (ESG) considerations the core elements of the business model, B2B insurers can remodel their policies and stay marketable.
With most corporate companies affected by ESG issues, catering to climate or environmental risks can give B2B insurers a natural edge and increase their chances to grow revenue and add value to clients’ business models.
Although personalization is the real catalyst for growth in B2C insurance industries, it can also be incorporated into the B2B insurance model to improve productivity and acquire potential clients.
The prospect of delivering a well-timed offer is unparalleled. With most companies hardly hit by the pandemic and recovering still, 2022 presents itself as the era for insurers to provide companies with policies that companies cannot put down. This is where most insurers have leveraged their sales and helped companies sustain with their heads up.
With proactive offers and personalized policies in place, B2B insurers have cross-selling opportunities that can enable them to acquire profit and retain long-term clients.
This means insurers must prioritize building an engaging experience with the clients while taking them through a digital journey. Client satisfaction has become the gold standard for insurers, and the ones assuring these criteria are met are witnessing profitable prospects.
4-Establishing a digital ecosystem
With the traditional insurance model falling out and a digital ecosystem nurturing its entrant in the B2B insurance industry, the insurance industry has had a paradigm shift. With 70% of consumers prepared for integrated digital ecosystem services, B2B interactions have changed significantly.
As ecosystem strategies continue to provide core growth opportunities and generate value for B2B insurers, most global B2B insurance companies have prioritized the digital ecosystem model to increase revenue growth potential.
That’s not where it ends! It has been estimated that this integrated network economy could generate a global revenue pool of about $60 trillion by 2025, with a potential increase in total economy share to 30%, compared to 1-2% in 2022.
As a result, many B2B insurance companies are developing policies to engage with the emerging digital ecosystem in different areas such as healthcare, mobility, and so on.
5-Effective productivity strategies
Productivity in the B2B insurance industry is directly related to growth and economic value; hence, addressing productivity is imperative to sustain the insurance industry in the long term.
Top insurance companies have started addressing the business's structural expenses and performance potential across value chains - such as product development, sales and distribution, internal operations, technology, and corporate functions to deliver maximized benefits and accrue value.
By improving the cost structure and distribution, along with the factors above, B2B carriers can positively impact the B2B insurance industry and accelerate their growth and client base.
If you’re still thinking about how to play your card rights, a strategic move based on the above trends already being followed by top insurance companies globally will give you a head start. In an ever-competitive field where B2B insurance agents are constantly competing against each other, we hope that this 2022 B2B insurance industry outlook will give you an insight into the current stats and help you configure your moves accordingly.
Be sure to read our insurance blogs to learn more tips on how to grow your career in this field.
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