COVID-19 will be by far and away the most important theme in insurance throughout 2021, but sustainability will continue to be an essential long-term theme, according to GlobalData, a leading data and analytics company.
GlobalData’s latest thematic report, ‘Insurance Predictions 2021 – Thematic Research’, states that COVID-19 will be the defining theme until 2023, as it will transform how insurance works, and how the markets it insures operate.
Ben Carey-Evans, Insurance Analyst at GlobalData, comments: “COVID-19 will change markets and transform consumer behavior as consumers and businesses are likely to be even more risk-averse post-pandemic. Furthermore, when it comes to returning to travel, they will be wary and are more likely to take out new insurance policies. Lines such as business interruption and travel, which have seen high levels of disruption, should see penetration rates rise as people will want to make sure they are fully covered.”
Sustainability will also be a key theme throughout 2021 and insurers should continue to prioritize this theme despite how difficult it is likely to be. While there could be a temptation to relax targets following a difficult 2020 and what looks to be a challenging 2021, the long-term impact of climate change will have a far more severe impact on the insurance industry, as we see more significant weather incidents and people increasingly look to avoid unsustainable businesses.
Cybersecurity is another theme discussed, as it continues to grow in prominence due to increasing digitalization. It has also become more topical due to COVID-19 as employees around the world continue to work from home, which has encouraged attempts at fraud pick-up. GlobalData’s 2020 UK SME Insurance Survey found that 8.5% of all SMEs and 33% of medium-sized businesses were more likely to purchase cyber insurance as a result of the pandemic.
Carey-Evans adds: “The impact that COVID-19 has had on these themes will shape their evolution in the coming years, which is what makes it clearly the standout theme in 2021. It is a very interesting time for insurance, as the pandemic will have more of a transformative impact on the industry than any one event in previous history. The sudden changes to consumer and employee behavior will completely change how many products need to be packaged, managed and sold. It also does not appear as though old habits will immediately return once the pandemic ends.”