Happy New Year: Top Insurance Trends for 2016

As we kick off the New Year, many are wondering which trends will drive the insurance industry in 2016. Current market conditions suggest this year will be shaped largely by the ongoing prevalence of cybersecurity, the aftershocks of major merger & acquisition deals in 2015, the emergence of new global competitors and modernization of the industry.

1) Cyber risk. Cybersecurity is top of mind for insurers heading into this year. Insurance agents will need to focus on new products to help deal with cyberattacks in order to maintain their credibility in 2016.

The threat is twofold in the insurance industry, where companies face potential exposure of existing contract information and claims emanating from M&A deals they were not aware existed prior to the merger. Insurance agents must have a firm grasp on what their software can handle and immediately address any gaps that exist within it to stay on top of claims.

In an industry that’s all about guarding against risk, it’s essential that customers don’t fear their data is at risk with your company. As consumers continue to demand more real-time access to their data so they can submit claims electronically, we’ll see insurers striving to find the balance between providing easy customer access and ensuring unwanted third parties cannot breach systems.

2) Globalization. 2016 will mark the rise of global competition in both traditional and non-traditional markets. Growing economies in countries like China and India will bring new competitors to the playing field, and it will be important for insurance agents to keep track of these newbies as the competitive landscape expands across borders.

Changes will need to occur in the traditionally strong insurance markets of the U.K. and U.S. for them to maintain their status as key players. The U.K. will need to revamp and overhaul outdated and “quirky” processes in order to make it easier for companies to set up and operate business in its borders. Meanwhile, the U.S. will need to adopt a more global view and focus less on the internal economy in order to stay ahead in 2016.

3) Consolidation. 2015 was a record year for M&As across all industries, and insurance was no exception. We will see M&As continue this year, although not quite at last year’s pace. In 2016, companies will face the integration challenges that follow a merger. Executives will need to examine everything from financial systems and corporate reporting to underwriting and policy administration models in order to ensure two companies to become a cohesive unit.

Companies that fail to address a full integration following an M&A deal risk fragmentation and forfeiting a common model across the organization. 2016 will be an essential year for companies to focus on creating a larger, more unified business following all the mega-deals of 2015.

On the other hand, we will also see smaller, niche breakaway groups that are looking to take an entrepreneurial route as a response to the creation of so many large companies in 2015.

4) Digitization. It’s no secret that the insurance industry has long been a laggard when it comes to modernization and digitization. But personal insurance agents in particular have made progress, and claims management and business acquisition agents aren’t far behind.

The largely paper-based B2B and reinsurance sectors are still a bit behind on going digital. While these organizations will not make the complete switch to digital in 2016, they will begin putting plans in place to implement modernization.

The next 12 months promise plenty of change for insurance organizations and the industry at large. In order to stay ahead of competitors, independent insurance agents must embrace this change. It will be up to them to capitalize on new opportunities in order to come out ahead in 2016.

Richard Clark is business development director at Xuber.