Six auto insurance predictions for 2024

The last few years have been turbulent for the auto insurance industry to say the least: the rollercoaster of COVID, increasingly frequent and powerful catastrophic events, shifting driver habits, and more have changed what the “new normal” is today. Despite these challenges, I’m excited about what’s ahead. Here are some of my predictions for the industry, along with ways Arity can help your organization achieve its 2024 goals.

#1 Carriers will feel comfortable saying the “G” word again

Growth will become important for carriers that feel comfortable with the rate levels and the current state of their underwriting processes, but they will also look for smarter distribution channels to source customers. At LeadGenWorld last year, I spoke to marketers and lead generators and predicted that carriers would not buy as they had before COVID. And we’re already seeing that happen as many carriers return to growth mode.

#2 Carriers will seek out and embrace new, smarter, faster ways to segment risk

If the last four years have taught the industry anything, it’s that they cannot accept “business as usual” going forward. The days of seeking out consumers based on limited filters like drivers in Georgia that are looking to bundle are over, knowing how slowly carriers returned to growth along with what new filters and restrictions they’ve applied in 2024 so far.

Lead aggregators and agents are scrambling to find and build more advanced targeting mechanisms to meet these new expectations while regulations are still in flux with privacy, especially when it comes to consumer tracking and consent across cookies and phone calls. Carriers are continuing to develop more complex pricing strategies and seeking out novel data sources to enhance their growth strategies going forward.

The use driving data will become even more important in the auto insurance space, as it provides carriers the ability to truly market and price to individual drivers across the entire customer journey: from point of quote, underwriting, pricing, claims, and retention/renewal – and Arity has a solution for developing that driving data-enabled ecosystem.

“There will be insurance deserts… There are certain places where if we can’t spread the cost appropriately and we can’t price it, then we shouldn’t do it.” – Tom Wilson, CEO of Allstate in The Wall Street Journal

#3 AI and ML will make meaningful strides in the industry

There are a number of startups working to develop artificial intelligence (AI) and machine learning (ML) products to service the insurance industry and augment areas where staffing and retention have been difficult – e.g., customer service, claims, and sales agents. New efforts to reduce time to quote, virtual claims handling, and other areas where massive amounts of data need to be analyzed quicky are ripe for AI and ML integration. This could have a big impact on how carriers approach our next prediction: consolidation.

If the technology exists to handle inbound customer communication that can resolve the complex Telephone Consumer Protection Act (TCPA) regulation that is being discussed, it will be easier to onboard customers from book rolls and acquisitions than ever before.

Arity has built ML tools to help optimize customer acquisition efforts and have plug n’ play capabilities for your own tools and models. Thinking about this for your own organization? Arity can help.

#4 More consolidation among existing carriers will occur

High combined ratios, pressure to become profitable, and more efficient competition will lead to some businesses folding or being bought up. Confie acquires Acceptance Insurance, General Electric exits the insurance business, and multiple top ten carriers are not offering home insurance in several large states like California, Florida, and Texas.

More consolidation in the market will lead to higher prices for consumers as its already a driver for rising inflation across multiple lines of business. The auto insurance carriers that will win going forward are the ones who can attract and sell to a well-defined customer profile, and who have developed systems to optimize every customer touchpoint.

#5 New technologies and adjacent industries will spawn new contenders in the carrier space

I spoke at the InsureTech Connect (ITC) conference last year on a panel with several leaders in the insurance, telematics, and OEM space, and we all agreed we’re seeing movement away from how OEMs traditionally viewed the insurance industry. Several OEMs (General Motors, Tesla, Rivian, Toyota, etc.) have started their own insurance carriers or partnered with an incumbent carrier to smooth out the vehicle purchase journey and maintain an additional touch point with customers beyond on-going service at dealerships.

Connected cars enable an even more transparent view into driver habits, but it’s vital that companies are prioritizing user data privacy and believe in transparency regarding data usage.

#6 Roadway accidents and fatalities will continue to rise, unless we do something to change that

The makeup of the American automobile fleet has changed drastically over the last 20 years: there are fewer sedans on the road, average vehicle weight has crested 4000 lbs and continues to rise, and these factors – among others – contribute to a rising fatality and accident rate on the roads.

Despite this negative outlook, Arity continues to support road safety, and we’re collaborating with auto insurers, municipalities, and OEMs to find ways to influence driver behaviors and make our roads safer for the future.

If you’ve read through these predictions and are looking for ways to take action, Arity has the expertise to help you determine how you can affect change whether you need a solution at point of quote, renewal, or anywhere in between.

Want to learn more? Reach out, and we’d be happy to hear what your goals are and discuss how our data-driven solutions can help you achieve them.