InsurTechs and Reinsurers have plenty of hurdles to overcome as the market shifts and changes. The insurance industry has faced regulatory challenges, supply shortages, and many other difficulties in the last few years. These things culminated in forming a so-called hard market, creating a chain of events that would follow. The phrase “hard market” refers to a moment when the market cycle is on an upswing that causes financial hardship for insurers. If you’re wondering how market prices could affect InsurTech — and how the hard market will impede reinsurers — your concerns are valid. Evidence suggests that insurers and reinsurers may face a negative impact from the hardening of the market.
Find out exactly how the market is changing — and why it’s crucial for InsurTechs to leverage technology as it shifts.
InsurTech isn’t the only sector that felt an impact because of the hard market. Many economists have also noted that it’s affected inflation, too. Inflation is at a remarkable high due to supply chain issues and the reverberations of COVID-19, but few industries have felt the impact of inflation as intensely as insurance. Indeed, inflation and insurance seem to have a mutually detrimental effect on each other, with inflation causing a shortage of insurance supply and this shortage further exacerbating inflation.
You may also wonder whether the recent inflation may impact insurers’ access to capital. Indeed, the valuation of public market capital has fluctuated dramatically, leaving some insurers in a bad position as they cannot access it at the current price point. Some insurers have pivoted towards a reinsure model to combat this issue, but this has had inconsistent results.
Many insurers viewed reinsurance as the solution to the rising cost of capital, but the hard market has even impacted this sector, making it difficult to maintain consistent reinsurance rates. Indeed, rates have risen considerably, but some InsurTechinnovators have stepped up to meet the challenge. Platforms such as Portal Pro have made it easy to gain an overview of coverage options and management tools, which has simplified policy administration for many insurers.
With market prices affecting reinsurers and disrupting the supply and demand of the insurance industry, it may seem like few solutions are in sight. Contrary to this perception, though, many innovative solutions are emerging that are poised to disrupt the hard market. InsurTechis one of the most promising of these. With various tools at insurers’ disposal, InsurTechcan provide a viable path toward restored profitability — even if inflation, capital costs, and reinsurance rates are rising. Discover the solutions that an effective InsurTechplatform can provide.
Say goodbye to outdated systems and begin looking at a solution that will provide what you need to increase productivity, decrease costs in the long run, deliver frictionless transactions, and remain competitive in today’s environment. For more information about VRC’s Verity software and to book a demo, click here or contact us at (541) 209-0700.
