Over the next decade, the insurance and third-party administrator landscape will continue to evolve.
And while it is impossible to predict the top challenges that will face risk buyers, intermediaries, TPAs and insurers so far into the future, it is interesting to gaze into the crystal ball.
This was the topic of a panel discussion I participated in recently featuring Charles Martin, managing director of Marsh; Dave North, president and CEO of Sedgwick, Inc; and Scott Hudson, president and CEO of Gallagher Bassett Services, Inc. during the “2025 Outlook: Forecasts and Predictions from the CEO’s Desk” session at the Workers’ Compensation Educational Conference in Orlando, Florida.
Here is a look at the top risk trends and challenges facing insurers and their stakeholders over the next decade. Understanding these will help buyers and intermediaries select insurance and TPA partners that can help them today and far into the future.
See also: ACA risk adjustments create risk
Insurance buyers will likely face three key market realities that shape their risk programs:
Customer demands. Buyers will need to respond to their customers’ increasing demands for simplicity, speed and convenience. Before building new business processes and technical infrastructures to meet these expectations, buyers will need to fully understand the risk implications of potential technologies and workflows, and how to manage and mitigate those exposures.
The need for value. Smart insurance buyers will demand even greater value from intermediaries in two important areas: loss prevention and claims management. On the workers’ compensation side, buyers will likely become even more interested in how brokers, insurers and TPAs produce better outcomes for injured workers given the potential continuation of medical inflation, which the PwC Behind the Numbers 2017 predicted could escalate above current levels.
Data directs action. Big data is a sea change whose waves will continue to be felt in 2025. Buyers will look to intermediaries, insurers and TPAs as data translators that add value by uncovering actionable information to improve risk performance. The difference in 2025 will be the scale of data available and the ever more sophisticated analysis required to find key learnings that improve the performance of both programs and claims.
There will be new online choices for buying insurance and competition will require a better value proposition to close sales. (Photo: iStock)
Agents and brokers will also face key challenges in the years ahead, including:
A smaller, more competitive market. New online choices will emerge for buying insurance. At the same time, M&A activity will likely lead to fewer intermediaries, given the need for scale, expertise and customization required to meet buyers’ needs. With the narrowing of the market, intermediaries will look to insurers and TPAs for help identifying and pursuing new business opportunities.