3 minute read 27 Jul 2022
Businessperson speaking at board meeting

The State of Commercial Insurance: A survey of insurance carriers, brokers and policyholders

Authors
Laura Hollerich

EY Americas Insurance Distribution and Sales Optimization Leader

Insurance industry leader experienced in global broker engagement and performance. Nonprofit board member. Mom.

Charlie Mihaliak

EY Americas Insurance P&C Transformation Leader; Principal, Strategy and Business Transformation

Husband. Father. Teacher. Problem solver. Team builder. Mentor. Happy warrior.

3 minute read 27 Jul 2022

A joint survey between CIAB and EY shows how insurance carriers, brokers and policyholders view the changing insurance landscape.

In brief 

  • Accelerated, collaborative digital transformation during the pandemic improved the policyholder experience with self-service portals and faster policy issuance. 
  • With its high return on investment, recruiting talent remains a key priority just behind technology.
  • Policyholders and carriers appear to have varying perspectives regarding ESG reporting than brokers surveyed. 

The COVID-19 pandemic put the insurance ecosystem to the test. With the emergence and evolution of multiple variants creating additional uncertainties, carriers and intermediaries, including brokers and managing general agents/underwriters (MGAs/MGUs), faced increased pressure to innovate and adapt. While the industry weathered the storm well, the pandemic amplified vulnerabilities and gaps in technology, talent and infrastructure, and the lessons learned have better prepared the industry for current and future challenges.

Currently, key areas of pressure include evolving customer preferences and digital transformation; systemic risks, including environmental, social, and governance (ESG); premium pricing; overall macroeconomic conditions; and geopolitical risk. This high-stress environment is forcing the industry to transform to ensure that added value, transparency, efficiency, modernization, and relevance are delivered to their customer base.

The Council of Insurance Agents & Brokers (The Council) and Ernst and Young LLP (EY) initiated a state of insurance market study, inviting top insurance carriers, brokers, and policyholders to respond to questions on current industry trends and challenges that shape their relationships.  

The survey polled 72 respondents, representing 47% of carriers from the top 20 insurers, with 42% from the top 50 based on asset size; 55% of the top 20 U.S. brokers, with 30% from the top 50; and 35% of the top 20 international brokers. This report is reflective of the survey findings, along with additional commentary on the accelerating macroeconomic and geopolitical events affecting the world in the time since the survey was fielded.

Top survey findings include: 

  1. Operational innovation and flexibility were key to insurers’ success during the pandemic, resulting in policyholders reporting reluctance in changing their current brokers. However, the emergence of broader service needs and reliance on alternative risk transfer solutions and the excess and surplus (E&S) market (which clients are eager to consider) could lead to such a change in the future.
  2. The pandemic accelerated digital transformation, with policyholder self-service portals being viewed as the minimum standard for modernizing customer journey/customer service models. Brokers increasingly seek to integrate their systems with carriers to expedite quoting and policy issuance, positioning themselves to provide customized products and services.
  3. Carriers, driven by the need for profit improvement, efficiency and reduction of expenses, are increasingly leveraging digital transformation and data analysis for underwriting and product innovation. But more collaboration is needed between carriers and intermediaries to drive demand for these innovations, increase trust, and better educate and support the customer in digital transformation.
  4. Policyholders and brokers are experiencing hard market “fatigue” and are looking to mitigate premium increases with lower limit reductions or are seeking capital from new market entrants. As a result, carriers predict a rise in self-insurance solutions and alternative risk transfer through fronted or captive solutions.
  5. Insurance buying, advising, and underwriting skills are being tested by emerging risks not necessarily contemplated with the traditional risk transfer products or risk prevention services currently available. At the same time, clients are reporting a shift to a more holistic approach to insurance and risk management decisions, with increased communication among senior management and boards.
  6. Most policyholders cite cyber and economic risks as the areas of greatest concern to their evolving risk profiles. Remote work is adding to the increase in the frequency and severity of cyber claims, with ransomware and phishing scams being chief concerns.        
  7. After technology, investment in talent remains one of the highest for both insurance carrier and distribution groups. At the same time, return on investment in talent is perceived to deliver more value, which reinforces the sector-specific importance of the human element and continued efforts to step up talent recruitment and development in insurance.
  8. There is a high variance between carriers/policyholders and brokers regarding their perspectives on ESG reporting, with policyholders and carriers exhibiting far more preparedness in their reporting than the brokers surveyed.

Summary

Operational innovation and flexibility helped insurers succeed during the pandemic. However, this crisis also uncovered the need for numerous improvements including technology and process improvements, workforce changes and ESG considerations. Combine this with added pressures of global conflict, natural disasters, supply chain woes and economic challenges, the industry is ripe for change. Moving forward, carriers, brokers and policyholders will need to acknowledge their needs and differences to drive positive transformation across the insurance industry.  

About this article

Authors
Laura Hollerich

EY Americas Insurance Distribution and Sales Optimization Leader

Insurance industry leader experienced in global broker engagement and performance. Nonprofit board member. Mom.

Charlie Mihaliak

EY Americas Insurance P&C Transformation Leader; Principal, Strategy and Business Transformation

Husband. Father. Teacher. Problem solver. Team builder. Mentor. Happy warrior.