It’s hard to talk about 2022 without a look at 2021 first.
We all experienced how COVID accelerated adoption of technologies like cloud, AI and mobile. We also saw the disruption in supply chains and the shortages of both materials and labor that emerged as the economy recovered.
But COVID also spurred innovation, whether in how businesses engaged with their customers or the proliferation of new advanced driver assistance systems (ADAS) added to vehicles to improve safety and create better driving experiences.
With these innovations and others came new levels of complexity for the industry. And while the industry has begun to adapt, its future is still developing.
The Road Ahead
Which leads to 2022 and what appears to be another year of COVID uncertainty.
Here are the five big 2022 trends we’ve identified:
- The changing work landscape and its continued impact on auto sales, traffic volumes and accident severity
- The growth of ADAS and connected vehicle technologies
- Climate change and its emergence as a significant factor in the future of insurance risk and regulation
- New customer expectations in our on-demand, need-it-now world
- A carry-over from 2021: increasing complexity given all these factors continuing to disrupt the status quo
1. The Changing Work Landscape
Let’s look at the changing work landscape and its impact on auto sales, travel and accident severity.
According to a survey by Workplace.com, 37% of U.S. employees will work remotely in 2022.
The changing nature of work along with the cash pumped into the economy from federal aid prompted many people to buy their very first vehicle in 2020.
New vehicle registrations in New York City alone rose 37% between August and October 2020.
This year, U.S. auto sales are expected to rise from 15 million to 15.7 million, with short supplies limiting sales but boosting pricing power. Both point to strong recovery for the auto industry.
In 2020 and 2021, we saw unprecedented declines in miles driven. The new omicron variant is the big unknown in forecasting traffic volume in 2022, with inflation also clouding the picture. Through September, government data shows miles driven still down 5% from 2019. It is anticipated that miles driven will recover in 2022, but where and when people drive will be different.
2. The Growth of ADAS
The second trend is the increase in the overall number of vehicles equipped with ADAS and connected car technologies.
According to data from MarketWatch, ADAS is anticipated to rise at a considerable rate between 2022 and 2027. Recent reports from OEMs suggest that nearly 80% of vehicles purchased in the U.S. market between Sept. 1, 2020, and Aug. 31, 2021, were at least equipped with automatic emergency braking.
Access to connected car data is a central part of the right-to-repair legislation now making its way through the courts. And with more vehicles now coming equipped with semi-autonomous features, the National Highway Traffic Safety Administration’s interest in understanding more about the impacts of these systems on real-world driving drove the issuance last year of a standing general order outlining reporting requirements the OEMs and other companies must now meet.
See also: P&C Claims: 4 Themes for the Future
3. Climate Change
The third trend is climate change. The P&C insurance industry has been at the forefront of feeling the effects of climate change, as the number and severity of severe storms has grown. And more frequent catastrophic events combined with evolving regulatory requirements could threaten company business models and make insuring some risk unaffordable for customers or unfeasible for insurers.
4. Changing Customer Expectations
Next are changing customer expectations, where digital, mobile and personalized experiences have become table stakes.
According to a recent study of P&C insurance customers conducted by JD Powers, while the industry is investing heavily in back-end technologies like straight-through processing to improve the claims experience, there’s still room for improvement.
The study found that while the technology is there, adoption may be a barrier.
Our last trend is complexity. The year ahead promises more vehicle technology such as ADAS, more data and more disruptive entrants turning heads and turning traditional business models upside down. In 2022, the industry will continue to turn to technology and connected systems to simplify and streamline processes to ultimately create better customer experiences.
You can read more about the trends that made headlines in 2021 here.