In recent years, the insurance industry has encountered its fair share of challenges. However, amidst these trials lie ample opportunities for growth and innovation. From the burgeoning realm of digital transformation to the escalating significance of cybersecurity and the emergence of Insurtech, the future holds promise for insurance agents willing to embrace change. Here’s a closer look at the evolving landscape and the myriad opportunities it presents:
Expanding Horizons: D&O, Corporate Crime, and Professional Indemnity Insurance
Insurers are starting to pursue digital asset and cryptocurrency coverage as an alternative to the ebb and flow of mergers and acquisitions. These new technologies have become popular with asset managers helping clients diversify their portfolios. However, they come with a lot of risk, which is why there’s an increased interest in Directors and Officers, Corporate Crime, and Professional Indemnity Insurance.
Directors and Officers Insurance
Directors and Officers (D&O) insurance can provide financial protection against legal expenses, settlements, and judgments from allegations of regulation non-compliance or failure to fulfill fiduciary duties. It can also cover damages from lawsuits related to cyberattacks or breaches of data privacy laws. D&O insurance can even help mitigate reputational risks and claims of professional negligence, errors, or omissions related to these technologies.
With the increased use of Insurtech and potential for cyberattacks and data breaches, D&O insurance is crucial. Company executives know it. According to Next Move Strategy Consulting, the global market size for Directors and Officers liability insurance is estimated to exceed $48.81 billion by the year 2030.
Corporate Crime Insurance
Financial advisors and managers dealing with digital assets are vulnerable to all kinds of cyber-related crimes. Corporate crime insurance can provide coverage for financial losses resulting from cybercrimes, including theft, unauthorized access to client data, and extortion attempts.
Other related risks may include insider trading, embezzlement, or fraudulent activities involving digital assets. Corporate crime insurance also can protect against losses caused by dishonest employees, including theft of digital assets or misappropriation of client funds.
In 2022, the global crime insurance market reached a value of $13.7 billion. Allied Market Research anticipates it to rise to $47.7 billion by 2032. They predict it will exhibit a compound annual growth rate (CAGR) of 13.5% from 2023 to 2032.
Professional Indemnity Insurance
Professional indemnity insurance, also known as professional liability insurance, protects professionals and businesses from financial losses that come from claims of negligence, errors, or omissions due to their professional services. Asset managers are at risk of professional liability from alleged errors, omissions, or negligence. They may also be accused of misrepresentation if clients incur losses due to the performance of their digital asset investments.
These forms of protection are critical to have in place during this time of volatility. By securing comprehensive insurance coverage, asset managers can protect themselves, their firms, and their clients against a wide range of risks and liabilities inherent in digital asset advisory services.
A new report from Business Research Insights projects the professional liability insurance market to rise from $42,530 million in 2021 to $60,103.6 by 2031, with a CAGR of 3.5% over that decade of growth.
Annuities
The strained economic conditions of the last few years have had many Americans worried about their investments and prospects going into retirement. In 2023, annuity sales in the United States reached a record high of $385 billion. That was a 23% increase from 2022, which had also set a record. As Baby Boomers are retiring, they are turning to annuities to help lock in a consistent retirement income.
According to the United States Census Bureau, approximately 10,000 Baby Boomers will reach the age of 65 every day of 2024. By 2030, all Baby Boomers will be of retirement age (65+). That may mean continued interest in annuities over the next several years.
Small Business Insurance
There’s been a surge in new small business start-ups over the last few years. In fact, according to the U.S. Small Business Administration, 2023 set a new record for new business applications.
Despite potential challenges like inflation, worker shortages, high interest rates, and increased operation costs, entrepreneurs are forging ahead. That presents another opportunity for independent insurance agents.
New small businesses means they’ll need general liability insurance, commercial property insurance, workers’ compensation insurance, health insurance for employees, umbrella insurance, and potentially others. Depending on the nature of the small business, even cyber insurance may be an essential cost of doing business.
Final Thoughts
As we move into a new era, embrace change and be willing to adapt to meet the latest challenges. The ability to pivot and innovate will set you apart and position you for long-term success. Invest in yourself by continuing to learn and acquire new skills, especially regarding new risks like AI and cyberthreats. Stay informed to remain competitive in an ever-evolving insurance landscape. Remember the current challenges are temporary and opportunities for growth. Stay positive and trust in your abilities to overcome obstacles and achieve your goals.