From Mother Nature doing her thing to the rise of insurtech companies, 2023 proved to be a unique and challenging year for the insurance industry.
So, what can we expect for 2024?
As we step into the new year, let’s look into the trends that Melon Local predicts will influence not just insurance agents but also their customers.
Consumers Will Be More Price Conscious
With a steady climb in insurance rates, 2024 is shaping up to be a year where budget-consciousness takes center stage. Auto insurance rates have drastically surged by 29 percent since 2018, and consumers may be in for a rude awakening this year with an additional 12.6 percent hike.
According to a recent survey from Assurance IQ in the fall of 2023, about 63 percent of Americans with insurance saw their home or renters insurance costs rise within the past year, and 67 percent were hit with a rate increase on their car insurance.
We’re also looking at potential upticks in commercial property and liability policies, estimated at 8-10 percent and 4-8 percent, respectively.
Considering that the same Assurance IQ survey found that over half its participants said they are cutting back on spending in other areas to make room in their budgets for the added costs, you can expect customers to weigh cost savings more heavily than brand loyalty.
This will undoubtedly challenge agents to adapt their marketing strategies for an increasingly price-sensitive audience.
Climate Change Poses Risk & Regulatory Hurdles
The U.S. continues to grapple with costly natural disasters, from tornadoes and hurricanes to wildfires, leading to billions in damages annually since 2018. This trend shows no signs of slowing down in 2024, as more severe storm systems are likely.
It shouldn’t come as a surprise then that the insurance industry has felt the strain from these events. Last year’s exodus of major insurers from California due to wildfire risks highlights the industry’s vulnerability. Furthermore, the potential adoption of the SEC’s Climate Disclosure rule could reshape how companies report climate-related risks, affecting everything from underwriting to marketing strategies.
Regardless of the rule’s fate, major insurers will likely take a strategic shift in risk models and pricing among major players. Insurers may also take a proactive approach by focusing on climate-related risks in their advertising.
Artificial Intelligence Likely to Play a Bigger Role
The AI revolution in insurance is just getting started.
To put things into perspective, the global AI in insurance market size was valued at around $3 billion in 2021 and is projected to reach almost $46 billion by 2031.
This year, we anticipate a deeper integration of AI and machine learning in areas like underwriting, fraud detection, customer service and claims processing. Insurtech companies, already at the forefront of this shift, will likely continue leveraging AI to gain a competitive edge.
With major insurance companies like State Farm already exploring and utilizing AI, expect more enhanced technology to further refine pricing and risk assessment — paving the way for more custom-tailored insurance solutions.
Stay Ahead This Year with Melon Local
In the ever-evolving insurance landscape, one constant remains: Melon Local’s dedication to delivering results. From mastering the latest trends in paid and organic search to excelling in social media management, our unique approach keeps us One in a Melon. Schedule a demo with us today, and let’s GROW together in 2024!