2022 was a year of massive change for the UK general insurance industry – which has played out in ways that, despite our best efforts, were impossible to predict.  

We had the aftermath of GIPP, now coming up to its first anniversary, which completely changed both the pricing landscape and customer behaviour – seeing shopping and switching rates fall to their lowest in years, and effectively solving retention problems across the industry. Hot on its heels were fair value, the new Consumer Duty – together triggering new market entrants and product innovation. Then there’s been inflation to grapple with, the cost-of-living crisis, the great resignation – and the great shortage in terms of materials, parts and labour.  

All of that has meant we’ve seen more change in the past 20 months than the last 20 years. So what on earth is going to happen in 2023?  
We brought together an expert panel to discuss the year ahead in our latest webinar, Insurance 2023: Boom or Bust? Consumer Intelligence’s own CEO Ian Hughes and and Head of Consumer Strategy Catherine Carey were joined by Sam White, CEO at Freedom Services Group, and Branko Bjelobaba, Principal at Branko Limited.  

Here are 10 of their predictions… 
1. Prices will go up 

In 2023, prices are going to have to go up – particularly in motor. Grappling with inflation is going to be one of the top challenges for the market, in terms of what’s in people’s pockets, operational costs and what actually constitutes value in our brave – and broke – new world.  
2. Shopping and switching rates will go back up 

More expensive policies and more consumers pushed into financial vulnerability and price sensitivity mean shopping and switching are likely to go up again. That means firms will need to pay more attention to retention, and re-vamp their acquisition strategy post-dual pricing.  

3. Customers will become more vulnerable 

Without doubt, consumers will become more vulnerable in 2023. 7 out of 10 people are worried about paying their bills, and 27% now self-identify as vulnerable. And the FCA is going to expect the general insurance industry to do something proactive about it – in terms of identifying, understanding and providing for those customers.  
4. Products will evolve 

The panic response to GIPP has basically been to create essential products, and strip out cover. In 2023 that might mature into smarter ways to shape cover, analyse risk and support customers more holistically – rebalancing the quality/service/price equation. That might look like more segmentation, targeting of niche groups, utilising new data sources, more advanced machine learning, telematics options, or pay what you use/pay as you go products.  
5. Automation will improve 

Customers want insurance cheap, easy, fast and decent – usually in that order. In response, we might well see more investment in automation and digital customer journeys.  
6. Consumer relationships will change 

Consumer Duty is going to force firms to put the customer at the heart of their operations, and that should involve a significant change of mindset. Those treating it as Consumer Opportunity are likely to fare the best – and end up making more profit than those just trying to sell more and cheaper units.  

That should involve creating an emotional connection with consumers, understanding their needs beyond their insurance purchase, getting involved with communities and community partners – and re-imaging insurance away from a boring, off-the-shelf, annual grudge purchase, into a dynamic, multi-dimensional and tailored support-and-rescue service.  

Communicating well and often, setting expectations transparently, and working to exceed them will all be key elements.   
7. New entrants and lateral thinkers will challenge the market 
Culture change and innovation are always going to be easier for new entrants than old hats. There’s no ‘the way we’ve always done it’, no back book – and far fewer limitations or preconceptions.  

The market is rife for new ideas, fresh eyes, and out-of-the-box thinking. There is room for those prepared to take a less linear approach – for instance flexing to take up important elements of a risk instead of walking away if everything can’t be covered in one fell swoop. There is also room for more collaboration – for instance with government, trade bodies or between firms to fill key gaps in the market.  
8. Trust will improve 
The advent of Consumer Duty – if we get it right – could end up having a longer-term and positive impact on trust in the insurance industry. The impact on consumer behaviour may not be instantaneous, but it could change the market.  
9. Those playing chicken with the FCA will come a cropper (eventually) 

Firms doing the bare minimum to meet the basic letter of FCA law – particularly when it comes to fair value and Consumer Duty – and trusting in ignorance as an alibi, invisibility amongst peers or regulatory discretion – are highly likely to regret it – possibly before the end of 2023.  
If you’re an outlier, if your data isn’t up to scratch, if you’ve not made an effort to address things like fair value, communications and support – you will fall behind the changing market, and you will (eventually) get a knock on the door.  
10. Speed (and data) will be of the essence 

The insurance industry adapted incredibly swiftly to Covid – and that proves it can move, and move fast, in the face of volatility. And 2023 is definitely going to be volatile. Instead of trying to hold the line against change, it needs to keep up that agility, be prepared to do something different, be kind to customers when there isn’t a pandemic on – and keep adapting and responding to the environment in which we all find ourselves.  

[Whitepaper] Vulnerable customers in the age of the cost-of-living crisis.

We address how the cost of living continues to drive the number of those identifying as “vulnerable” and so much more!  Helping you understand vulnerable customers, the relevant risk and regulatory advice, and get actionable insights to help create better outcomes for you. Download now!



Comment on blog post . . . 

Submit a comment

You may also like

Home insurance and Ukrainian refugees: what do customers expect?
Home insurance and Ukrainian refugees: what do customers expect?
31 March, 2022

When the government scheme launched in mid-March, nearly 90,000 people in the UK had offered homes to Ukrainian refugees...

Consumer expectations in the ‘Age of Consumer Duty’
Consumer expectations in the ‘Age of Consumer Duty’
2 January, 2024

Six months after the implementation of the FCA’s new Consumer Duty, the pressure on insurers to put customers first cont...

The Six Ps Of User Experience And Why It Matters
The Six Ps Of User Experience And Why It Matters
14 May, 2020

There’s no doubt that once the dust settles after the coronavirus pandemic the insurance market will look very different...