The past few years have taken their toll on the finance industry and business insurance is no exception. Between the pandemic, leaving the EU, and political and military turmoil across Europe, the UK has seen a tumultuous few years for the economy. In business insurance, this has meant that tracking trends and predicting what happens next has been a considerable struggle – but we’re giving it a shot anyway! From the effects of the cost of living crisis and inflation on insurance premiums to new data standards and even Amazon’s new comparison service up and running, here are some of the key things that could change Business Insurance this year.
Cost Of Living and Inflation
2022 saw a significant spike in inflation that has affected almost every market in the finance world and insurance is no exception. While some believe we’ve already hit the peak and things will only reduce from here, there is still the argument that 2023 could see inflation stay at this high rate, or even raise higher in the coming months. This has meant that insurers could be facing higher claims costs and may therefore need to charge higher premiums as a result.
This can be difficult to predict on a general basis, as the inflation we’ve seen as of late has been related to different markets at different times. Some months, food and fuel seem to be the focus and in others, imports and building materials see rapid increases – for businesses and their insurance providers, this can mean that the same claim for an identical rebuild or repair could be two completely different prices depending on the time of year the claim is made. For insurers, this makes fixed-price policies near-impossible this year and requires the industry to work hard to manage and move with inflation this year. Without proper management, profitability could go down for all parties involved.
Amazon’s New Comparison Service
Since becoming a huge presence in almost every retail-related market, Amazon has well and truly become a household name. From its market dominance in online shopping to its dominance in e-books and even with audiobooks and Audible, Amazon has well and truly grown to incredible heights. However, while there have been successes, there have also been plenty of failures, including the Fire Phone, Destinations, and Local. In 2022, Amazon took its first steps into the insurance business with Amazon Insurance Store, taking its share of the insurance comparison market by offering home insurance online via a number of insurers in a similar way to a broker.
What this means for insurance in 2023 has yet to be seen. While few have heard of this new service, like all Amazon products it has the chance of becoming something huge. This could be devastating for brokers and comparison sites or make business insurance costs fluctuate as Amazon attempts to undercut existing offers. It’s impossible to tell whether this will be a good or bad thing for the industry, or if it’ll even have an effect at all. It could disappear just as quickly as the Fire Phone, but it’s worth watching this space regardless.
Cybercrime seems to be a pandemic all of its own and is affecting industries across the globe daily. Insurance is no exception and when handling crucial and important information as well as important money and policies, it’s more important now than ever before to ensure that insurers protect their data. Cybercrime is up over 50% year-on-year and the importance for both insurers and consumers to take it seriously is growing too.
For insurers, this rise means that more care needs to be taken with consumer data and the money and information that is handled. This could result in the need for additional staff, software, or hardware to maintain good security. On the flip side, however, businesses are more aware now than ever before about their cyber security and the need for protection, which means 2023 could see increases in Cyber Crime-related insurance claims and products.
Consumers Will Expect Flexibility and Fairness
While flexibility and fairness have always been important to consumers, with the financial instability in the country currently, more and more people are taking extra care with how they use and spend their money. The same goes for businesses. What this means for insurance is that consumers, whether businesses or otherwise, will expect increased flexibility within their policies, including the ability to change details as times change over the year, and increased fairness. Previously, consumers may have accepted the first quote sent their way or the first payout agreement simply to get the process over and done with, however, social changes have meant that more and more people are willing to fight for a more fair offer.
For insurers, this means offering accurate and fair payouts and compensation where possible, particularly in cases where rebuilds and repairs are needed, and that all quotes and offers provided are not only fair but offer a degree of flexibility.
The insurance world could change drastically over the next months but it’s impossible to know just how much, if at all. Insurance has stood firm through plenty of economic turmoil, but it’s worth noting and keeping note of these potential changes so you can better manage your business insurance in 2023.
For more information or for a business insurance quote for your renewal, we are on hand to help. Simply get in touch with Ashburnham Insurance on FREEPHONE 0800 1696137.