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How inflation and the Consumer Duty transformed insurance in 2023
Reflecting on the regulatory action and economic climate that shaped the sector in 2023, Sarah Ouarbya, financial services consulting partner at Mazars, said the Consumer Duty had forced insurers to review their product book, do a bit of spring cleaning and axe some policies.
Ouarbya added that the Consumer Duty, plus the cost-of-living crisis, had also resulted in innovation when it comes to simpler, digital, online products.
When asked by Insurance Post Podcast host Scott McGee had the Consumer Duty created better value for customers, she responded: “It provides different value. People get less, but hopefully the essential coverage they need.”
When it comes to the ongoing impact of inflation, Martyn Matthews, vice president for personal and commercial lines for the UK & Ireland at LexisNexis Risk Solutions, said higher premiums for customers was a trend that is likely to continue.
Matthews said: “Even though inflation might start to drop, there is still going to be a period of time before insurers can react to that and bring prices back down.”
Rory Yates, senior vice president of corporate strategy at technology platform EIS, agreed that inflation is a long-term problem for the industry that the regulator was likely to kick the tires of: “Claims inflation has outperformed inflation. There are wider supply chain issues that aren’t going away. Insurers are going to have to address this long term.”
Looking ahead to what is likely to shape the insurance industry in 2024, regulation and compliance consultant Branko Bjelobaba said reduced supply of affordable insurance for certain sections of society will become a growing issue that the government may need to address.
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