Last year was a year like no other. And while 2021 will be unique in many ways, some of the unusual events and accelerated trends that got started in 2020 are likely to continue to affect insurance agencies and their clients throughout 2021. With that in mind, it’s important to be aware of predictions that will affect the industry and your agency in 2021.
Prediction #1: Difficult Market Conditions Persist
Insurers will need to reckon with the market they’ll be dealing with in 2021, and it’s one that will have more difficult conditions than usual.
Put simply, consumers are worried, and with good reason. Incomes are on a downswing for many consumers, and it’s predicted that 25% of states will see their median incomes decrease in 2021, a notable change from the years before and after.
As a response to lower incomes, inflation, and various state restrictions, consumer spending is down as well. Of course, that doesn’t mean that consumers won’t buy insurance; they’re still likely to consider that a necessity. But it does mean that they may balk at higher premiums and the suggestion of additional insurance products.
Insurers will have to keep consumer sentiment in mind and be able to demonstrate how they add value in order to maintain their customer base at a time when many consumers will be looking to cut costs or at least avoid increases.
Prediction #2: New Insurance Products and Practices Emerge
One of the pandemic-related changes in insurance that has everybody talking is the reductions and rebates that some consumers have seen in car insurance. But not every insurance change is going to result in insurance companies losing money. A variety of products that are either new or new to the consumer may emerge in 2021 due to changing world conditions such as climate change and the ongoing pandemic. These include:
- New increases or riders to cover work-at-home employees. With more employees working remotely, standard homeowner’s insurance might not be sufficient to cover all of the equipment that workers need to do their jobs.
- New weather-related insurance products. There can only be so many unusual fire seasons, hurricane seasons, or other weather events before they become the usual. With the changes in climate, you can expect agencies to limit some types of existing coverage to avoid huge payouts and to create new products for clients to buy in order to protect them against damages that were once rare and are now more likely to occur.
- New incentives and disincentives. Again, in response to increased climate-related damages, insurance companies may need to educate their clients on steps they can take to protect their property. They might offer discounts for taking new steps to prevent damage or refuse to cover damage if recommended protective actions haven’t been taken by the insured.
Prediction #3: Greater Personalization Becomes the Norm
Today’s consumers are looking for personalized products over one-size-fits-all solutions wherever possible, and insurance is no exception.
Luckily, today’s insurers have greater access to technology and detailed data that can allow them to create more personalized insurance products. Look for agencies to find ways to create more policies that meet a client’s specific profile and needs instead of using more standard, generic policies.
Increasing your agency’s success and relevance in the coming year means staying on top of the issues. To find out more about how your agency can thrive in the 2021 market, the American Agents Alliance can help. Contact us for more information.