2023: an unpredictable and volatile environment
As we look ahead to 2023, without a doubt, the recessionary climate is having or will have, an impact. Recessions and economic instability affect everyone. No one is immune to a plummeting Pound or descending Dollar, especially the target audiences and buyers an organisation sells to. As a result, Lloyd’s and the wider insurance market will have several challenges to deal with as we go into 2023.
Over the last few years, we’ve witnessed the insurance industry evolving, and digital transformation is no longer a pipe dream. With high technology adoption, and technological innovations like application programming interfaces (APIs), digital transformation programmes driven by Blueprint Two are evolving at pace. However, new opportunities and challenges emerge as data streams multiply and consumers are increasingly plugged in.
Digital convenience, flexible offerings and personalised service are what customers are demanding today. Therefore, insurers must emphasise digitisation as our world becomes more digitally driven.
Dominance of Blueprint Two
To this point, Lloyd’s Blueprint Two programme will dominate the agenda next year and into 2024. In fact, largescale changes are due to go live in Q2 2024. So, next year we will see the insurance market preparing for this.
For those less familiar, in November 2020 Lloyd’s released Blueprint Two. Blueprint Two is the third instalment in the Future At Lloyd’s, the marketplace’s transformation programme initiated by CEO John Neal, and follows the original Prospectus and Blueprint One.
BluePrint Two is ambitious and sets out the details and plans to build the most advanced insurance marketplace in the world. Lloyd’s is working with the market to build digital solutions that will make the market faster, more competitive and cheaper, helping customers face new challenges with confidence. To transition to this digital marketplace insurance organisations will need to invest and prepare as they build and deliver appropriate, relevant, easily adoptable solutions that provide real value and benefit for their organisations, the market and ultimately the end customer.
However, inflationary pressures will impact how quickly these plans can evolve. I recently read an article where Lloyd’s named inflation as its “second biggest challenge” after the Russia/Ukraine war. With ever-increasing inflation this will be a key area of focus, not just for Lloyd’s, but also the wider insurance market, with claims, inflation and interest rates undoubtedly having the biggest impact on the industry.
Escalating cyber threats
Additionally, issues in the cyber market have really come to the fore as the ransomware ‘pandemic’ has taken hold, and significant rate increases are allied with capacity contraction, while ransomware clarifications and sub-limits have become common. In response to threats posed by hackers, this has increased business insurance cyber claims, and companies are increasingly opting to buy cyber insurance. Therefore, it’s no surprise that the risk of cyber attack has risen to the top of the top ten business risks, as featured in the latest Aon’s 2021 Global Risk Management Survey.
Where the Russia/Ukraine war is concerned, there is no sign of the conflict ending soon; having sanctions in place will continue to be important in 2023. To this end, here at Northdoor, we have witnessed a definite uptick in demand from existing and new customers looking to expand or take up our Sanctions Checker offering.
Sanctions Checker is our powerful, easy-to-use system that significantly reduces the time and effort needed to perform global sanctions searches and checks against listed targets.
Working with your partner ecosystem
While there is increasing competition, there is also a wealth of opportunity to work with InsurTechs. Click To TweetWhile there is increasing competition, there is also a wealth of opportunity to work with InsurTechs, and we are seeing a trend for Lloyd’s practitioners to integrate more with third-party specialist providers. For example, we’ve just completed one API integration project and are about to embark on another for a different client. Insurers and Managing Agents that stand still will be going backwards and should welcome new business partners and innovative technology into the ecosystem. Here at Northdoor, we are investing and building out our API capabilities to help insurers take advantage of these opportunities.
Cloud adoption continues to grow
Cloud adoption and migrating more apps and workloads into the cloud in order to meet those BluePrint Two ambitions will also be high on the agenda. We’re talking to one company about moving their disaster recovery operation to the cloud, and there’s definitely more of an acceptance that cloud is the way to go when legacy technology needs replacing.
Insurers are navigating a volatile world, competing to withstand economic uncertainty, political instability and new business, investment and regulatory conditions that have emerged from the financial crisis. However, those with the courage to innovate will shape the sector’s long-term future and differentiate themselves as sector leaders in the year ahead.