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The property market is evolving but are insurers adapting?

Updated: Jul 3, 2023

According to the UK Home Insurance Market Report 2021, the rise of people working at home significantly changed the nature of reported claims. The severity of household claims decreased along with the number of burglaries and water damage claims but as the desire for home improvements increased so did the claims for escape of water and fire. This is because consumers were looking for more space in their homes and adding basements and second bathrooms, however more often or not those properties were never designed for those levels of structural change.

And when those claims come through, suppliers in the insurance supply chain are struggling to source materials or people. As our recent article on motor insurance indicated, it’s the perfect storm with product availability and costs elongating the length of the claim. To address this some insurers are cashing out but if an insurer can’t find a builder or suppliers, how will the customer? Whilst it may seem the easy option it could have a hugely negative impact on customer satisfaction.

Woman looking out of window at city in morning/evening twilight

Source : [Unsplash)

In addition to these challenges the ‘great resignation’ is playing its part. Location is no longer an issue now that claims handlers can operate from a laptop in their kitchen, so insurers are needing to find ways to retain their existing staff and attract new ones – all of which is adding cost to already lean budgets. We’ve also noticed the ‘great retirement’ in the insurance sector as loss adjustors and surveyors retire early and unfortunately not enough is being doing across the industry to attract young talent to those roles.

Then let’s throw in the mix of global warming. Storms Dudley and Eunice brought chaos across the country earlier this year and insurers have got to be more prepared and agile to deal with these storms – the frequency is only going to increase.

And of course, let’s not forget the regulatory challenges. Operational resilience rules and guidance came into effect at the end of March 2022 and all obligations need to be met within three years. Insurers are already addressing the impact of the FCA Market pricing study that aims to deliver fair value to all customers. But with premium rates being supressed and inflation set to get higher 2022 is expected to be loss making.

But despite this, insurers need to adopt and invest in advanced technology systems to cover both internal and direct-to-consumer operations. Without doubt the growing focus within the industry is on using InsurTech to improve customer engagements and offer more competitive and tailored solutions. Technology is also providing solutions to improve the environmental impacts of an insurance claim and thus reduce some dependence on others in the supply chain.

We will be releasing a series or short read articles over the next few weeks which will bring you further insights into the challenges that insurers are facing in this ever-complex property market, keep an eye on our website and LinkedIn.

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