If the past two years have taught us anything, it’s that agility and flexibility have been critical to reshaping how insurers step up for their customers to deliver support and satisfaction.

As a result of a booming housing market in 2021, where new homeowners entered the market at an exceedingly high rate, this was especially relevant for the home industry. In 2022, homeowners can expect to see an increase in creative thinking from insurers designed to better protect them from preventive risks. An increase in innovation to better protect our homes from the increasing effects of climate change is also a trend to watch in the coming year.

The rise of Hardened Homes to combat climate change and rising material costs.

For years, a combination of regulations, inflation, severe weather and building costs have led to raised insurance rates for homeowners across the United States.

As we look ahead to 2022, insurers will utilize technology advances such as connected devices, satellite data collection and machine learning models to significantly improve their weather forecasts and modeling capabilities. This should help insurers better predict and prepare for extreme weather, thereby lowering the risk of financial losses covered by insurers.

Technology is available to help insurers become proactive partners to their customers. From IoT devices that detect weather-related dangers and minimize risk to location intelligence that allows customers to be supported in the wake of a crisis, there are a variety of measures insurers can take to both improve their own capabilities during a storm as well as to protect their customers. In 2022, more insurers should invest in these technologies, which will improve the customer experience while reducing losses.

Climate change specifically is causing homeowners to take note of potential dangers to their homes and look for innovative ways to protect them. In fact, according to Hippo’s 2021 Homeownership Report, first-time homebuyers are 318 percent more likely than existing homeowners to say that climate change considerations factored into their homebuying decision. From the use of more resilient building materials such as concrete forms or bamboo to new drywall that better protects homes from flooding, there are a variety of developments that will make the Hardened Home a reality for more Americans in 2022.

This is a clear opportunity for insurers to realign our thinking with the changes taking place in the home industry. In 2022, you can expect insurers to begin taking into account when customers are using more fortified materials when writing policies.

InsurTechs will double down on data integration to become better partners with customers.

As the industry continues to innovate around changing customer expectations of insurers, a huge priority for the insurance industry will be modernizing their tech stacks. Given the shift in data sources available for insurers to utilize, having a platform that allows one to ingest dozens of data sources in real time is essential to be a collaborative partner with customers.

More and more customers look to their insurance provider to be a partner rather than one that just settles claims. Utilizing the immense data at hand, insurers can deliver higher customer satisfaction with improved underwriting profitability. For example, an increase in the use of automatic water shut-off systems by insurers is a prime example of an innovative product that harnesses data to mitigate risk.

According to the Insurance Information Institute, water damage and freezing accounted for nearly 30 percent of losses incurred by homeowners in 2019. Water losses can be preventable if customers and insurers take advantage of the tools made available to them. By using technology that measures water flow, pressure and temperature, water shut-off valves can learn how a household uses water and detect the smallest of drips, preventing a larger issue from happening.

Proactively identifying risks can save customers thousands of dollars and prevent smaller problems from turning into bigger headaches. As InsurTechs continue to improve their tech stacks and pair them with existing human capital, it will create an overall positive experience for both company and customer alike.

Public insurance companies will take bold bets on innovation through M&A.

Finally, as more InsurTechs go public and legacy incumbents grow their businesses, public investors will gain a clear understanding of the nuances that make these companies so unique.

The traditional insurers, who have been slow to adopt technological change in the past, will be more aggressive in attempting to acquire InsurTechs to take advantage of their impressive technology and data capabilities. A recent example is Chubb Ltd’s acquisition of Stream Labs, a RWC subsidiary that offers IoT-enabled water monitoring, leak detection and water shut-off products.

The key for such mergers to be successful will be if legacy insurers can achieve merger synergies through the integration of these InsurTechs.

The Road Ahead

While the past two years have taught us that making predictions is not wise, the insurance industry has stepped up in unconventional ways to deliver exceptional customer satisfaction while further strengthening the legacy fundamentals of many carriers in 2022. There is no telling what sorts of challenges 2022 will bring. Yet as companies of all types better enhance their technological solutions and capabilities, they will be equipped to address each and every challenge thrown their way. The industry will continue to deliver customer satisfaction in a big way in 2022.