Insurance brokerage industry trends for 2024

In the past decade, insurance brokers have gone through a major transformation. The insurance brokerage industry has been forced to innovate due to technological advances, regulation changes, and growing risk factors. As we look ahead to 2024 and beyond, there are many trends and insights into what the insurance sector will look like in the coming years.

In this article, we will dissect some of the major insurance brokerage trends, challenges, and innovations that can give us a glimpse into the future of the industry.

Major insurance brokerage insights for 2024

As with many industries, insurance brokers are constantly adapting to the modern world. The past couple of years have been pivotal … to say the least. Our world has experienced a pandemic, economic turmoil, and several major technological innovations. The insurance brokerage industry is no stranger to change. Let’s take a look at some important insurance trends and insights for 2024.

Artificial Intelligence is coming in hot

Since the boom of large language learning models in 2022, AI has taken the technological world by storm. Things that, just a couple of years ago, seemed only possible in sci-fi novels are now being implemented in essentially every industry. 

Insurers are now using artificial intelligence to assist in risk mitigation, claims processes, data analysis, customer support, and more!

AI is undoubtedly an excellent tool for insurance brokers that can accelerate and streamline processes, but there are also several AI risks and hurdles that insurers are dealing with in 2024.

For example, insurance regulators are starting to clamp down on AI regulations, especially when it comes to unbiased risk assessment. Due to the technology’s rapid growth, there are ethical concerns as well as cybersecurity risks with AI use that have no precedent and are yet to be clarified.

An online presence is more important than ever

The internet has created a pathway for many new insurance companies to become successful. The insurance brokerage industry is more competitive now than ever, but having a strong online presence is one of the best ways to cut through the competition and stand out from the crowd.

Millennials are now in their 30s and are one of the most important demographics for insurers. This younger generation prefers to purchase products online, so it is crucial for brokers to create user-friendly and informative websites for customers. A 2023 study found that more than half of Americans purchase insurance online.

Modern markets require modern marketing strategies

Twenty years ago, insurance brokers could simply place an advertisement in the newspaper or on a billboard, but those days are over. Nowadays, brokers need to be very strategic with their marketing strategies.

The modern marketing world is extremely diverse, and insurance brokers can use many different channels to their advantage. Some of the best insurance broker marketing strategies to implement in 2024 are search engine optimization, content marketing, email marketing, and social media.

Continuing evolution of regulatory compliance laws

One of the biggest takeaways from the insurance brokerage industry is the constant change in compliance regulations in recent years. With the rapid development of new technologies such as AI and major world events such as the COVID-19 pandemic, insurance regulators have been struggling to keep up.

Some of the most dynamic areas in which insurers need to be vigilant to stay compliant include data and privacy laws, the use of AI, climate change, market conduct, third-party risk management, consumer protection, and solvency.

The fact of the matter is that insurance compliance requirements are fluid, and regulators will constantly tweak regulations to fit current events. Therefore, it is vital for insurance brokers to stay up-to-date and informed about compliance regulations.

Climate change and sustainability 

There is no question that the climate around the world has transformed in the past decade, and it will continue to do so in 2024. Climate change has pushed many insurance brokers to adapt. Rising temperatures and the increase in natural disasters will have major implications in the way insurance companies assess risk.

Insurance underwriters will need to adapt their risk assessment processes — many companies may end up completely reforming their policies to better suit the increased risk of natural disasters. 

Insurers are well-positioned to address these risks, but industry leaders emphasize that effective climate adaptation and mitigation require collaboration between the private sector and public entities.

Additionally, insurers are beginning to create new products, or tweak existing products, to include climate change risks. Sustainability is at the forefront of the insurance brokerage industry. Companies in all fields are adopting sustainable practices, and insurance brokers are incorporating these new innovations into policy. Insurance providers have increasingly been creating specialized policies for electric vehicles, energy-efficient building projects, natural disaster prevention, and more.

Challenges brokers will face in 2024

Insurance brokers have been facing numerous new risks and challenges in 2024, and they must evolve and adapt their processes to counter them. Here are some of the most significant obstacles in brokers’ paths.

Economic uncertainty

Over the past couple of years, the economy has seen many ups and downs. This economic uncertainty, high cost of living, and risk of a recession have put a lot of strain on insurance brokers, and many have had to adjust their long-term strategies.

For example, the rising cost of goods and services has forced insurers to raise premiums as the risk of high-cost claims has increased.

Additionally, during times of economic turmoil, claimants tend to prefer to pay premiums in installments rather than by lump sum, which decreases the cash flow for brokers.

Shortage of workers in the insurance industry

The insurance sector is a rapidly aging industry, with less than 35% of insurance workers aged 35 or younger. This is one of the most central issues the insurance brokerage industry will face in coming years. In fact, due to the aging workforce, insurance brokers are expected to lose more than 400,000 workers by 2026!

One of the main underlying issues is that careers in insurance underwriting, data analysis, and leadership require a level of experience and expertise that the younger generation has yet to reach. Younger people in the workforce have also shown less interest in the industry in general.

The potential skill gap could have major negative ramifications for the industry, so insurance brokers must work to modernize and attract younger workers to careers in insurance.

Cybersecurity risks on the rise

Most businesses, including insurance brokers, now store important and sensitive data digitally. And with cybercrime on the rise, it is more important than ever for companies to invest in cybersecurity and insurance. AI-powered cyberattacks have also become a major threat as cybercriminals are now able to create more sophisticated attacks that can break through traditional cybersecurity.

Cyber-related claims have increased by 13% year over year. So, many insurance brokers have made moves to revamp and improve cyber liability policies. The increased risk of cybercrime has also pushed many brokers to increase cyber insurance rates.

Cybercrimes such as investment fraud, phishing, and data breaches have risen astronomically in the past couple of years, and no industry has been left unscathed. Not only have insurance companies worked to update and modernize cyber liability insurance packages, but brokers have also had to look internally at their own cybersecurity.

Due to the amount of sensitive data in the insurance industry, brokers are investing more and more money into improving security and protecting themselves from cybercrime.

Ransomware is one of the most serious modern cybersecurity threats to insurance companies. And with nearly 70% of the insurance sector working remotely, the risk of cyberattacks has only increased. So, brokers must adapt to these changes by improving security measures, educating employees on cyber risks and best practices, and preventing employees from using personal devices.

New insurance products and innovation 2024

As you can probably tell by now, trends in the insurance brokerage industry drive innovation — and as the insurance atmosphere is constantly changing, new products and technologies are always appearing. Innovation in the insurance sector is by no means stagnant. Let’s take a look at some of the major insurance products and innovations in 2024.

Claims process automation

We have mentioned artificial intelligence several times in this article, and for good reason. AI has been booming lately, changing and automating many processes across a wide array of industries. In the insurance sector, one of the most significant leaps forward is using AI to assist with Claims Process Automation.

Claims Process Automation not only speeds up insurance claims, but the machine learning programs are better at identifying fraud and can reduce errors.

This allows insurers to focus more of their resources on customer satisfaction, onboarding, marketing, and other tasks rather than the time-consuming claims process.

As mentioned, insurance regulators have begun stacking restrictions on what kind of data can be processed using AI and machine learning, so it’s important for insurers to stay on top of regulations.

Personalized premiums

Personalized premiums have been a major recent disruption to the traditional insurance policy structure of past decades. Insurers can now use big data, advanced APIs, and analytics to create customized insurance policy premiums that are tailored to a specific customer.

In essence, insurers use customer data, such as demographics, to create products and pricing designed for a specific person. This offers more choices for the consumers, and since the resulting policies cover only the individual customer’s needs, prices are typically lower. 

Personalized premiums assess risk in real-time, which can increase or decrease premiums depending on behaviors. For example, a life insurance premium could change depending on diet and exercise habits, and a car insurance premium could change based on someone’s driving habits.

Obviously, there are many challenges in implementing personalized premiums, but if the trend sticks, it could become one of the most significant changes to the insurance industry in decades.

AI chatbots

The insurance brokerage industry has often left customers confused and underserved. To combat this, one of the major technological advancements in the industry is AI chatbots, which offer more transparency and efficiency for customers.

Chatbots are incredibly valuable as they can streamline various processes by collecting information, sending automated reminders, providing 24/7 support to commonly asked questions, and even suggesting relevant products based on customer data. All of this helps to enhance customer satisfaction.

The advantages AI chatbots offer are undeniable. Simply put, they increase productivity by handling simple queries and reduce operational costs by managing high volumes of inquiries — all while helping keep customers informed.

Personal mobility insurance

It’s important for insurance brokers to adapt to our ever-evolving world. In terms of personal mobility, we have seen a rise in rideshares, e-scooters, and other modern transportation options — something standard car insurance won’t cover. There is a significant trend in the industry as brokers expand their insurance offerings to include Personal Mobility Insurance to address the unique risks associated with using these modern forms of transportation.

Personal Mobility Insurance protects against accidents and incidents that may occur when using anything from rideshares, e-scooters, and bicycles to rental cars, other vehicles for hire, and even public transport. It may also cover any unfortunate accidents that befall insured parties as pedestrians. 

Embroker in 2024 and beyond

So, where does Embroker fit into all of this? As the insurance brokerage industry transforms and adapts to the world around it, Embroker continues as a leader in the new age of insurance. As a pioneer of digital insurance, we have continued to innovate and improve so that we can provide customers with the best policies out there.

What does the future hold for Embroker?

New specialized insurance packages

Embroker was one of the first brokerages to offer fully digital and highly customized insurance policies that can be bought online and in minutes, But we didn’t stop there! In 2024, Embroker released new custom business insurance packages for specific industries, including real estate, consultants, and financial services.

These vertical policy packages streamline the process of purchasing insurance, making it much simpler for business owners to get all of the specific coverage they need.

To create these specialized programs, such as the Real Estate Insurance Package, Embroker surveyed businesses and professionals in each industry and analyzed the main struggles each sector faced. The result is an industry-specific policy package that provides protection and peace of mind to businesses.

Embroker ONE

Excess coverage for Tech E&O / Cyber insurance 

We have recently introduced Excess Tech Errors and Omissions (E&O) / Cyber. The product addresses the gap in the insurance market for digital Excess Tech E&O and Cyber policies by providing a user-friendly online tool for securing excess coverage with limits up to $5 million. 

This significantly reduces the time and complexity that is traditionally involved in obtaining excess coverage. The product is available to brokers with surplus lines licenses or through Embroker’s licensed partner firms. 

Continued enhancement of the insurance buying experience

Our overall goal is to simply and improve the insurance process for businesses. We are constantly working to enhance our systems and create specialized products and packages for businesses and brokers. As we mentioned above, having an online presence is extremely important for insurance brokers to ensure that customers are easily able to navigate and purchase products. We are constantly striving to make our platform as intuitive as possible so that businesses can find the insurance coverage they need at the best price.