Insurance trends and the road forward in 2022

Woman sitting at home in pyjamas and hair towel, looking at phone smiling as she considers new insurance options.

You probably don’t think of insurance as a ‘trendy’ topic – and fair enough, it’s not necessarily the most enthralling topic among the personal finance bunch. But like any area of finance, it has its own quirks and trends that develop over time.

Let’s take a quick look at some of the more unusual insurance trends and policy options that have emerged over the last year or so. With this insight, you can play fortune teller and theorise about what it might mean for your home insurance, car insurance or life insurance moving forward.

The rise of insurtech

Insurtech is a many-splendored thing, and as such can be difficult to define. In a nutshell, it refers to any technological devices or services used by insurance companies to tailor policies to individual customers in an effort to offer more appropriate insurance features with premiums accurately reflecting the profile of each policyholder. 

It includes things like car plug-ins that track your driving habits or the distance you travel for pay-as-you-drive car insurance, as well as sensors in your home that can alert you to fires, floods and break-ins. Insurtech can also encompass wearable fitness trackers which health and life insurance companies use to set premiums based on your general activity and associated fitness.

The 2021 World InsurTech Report noted a surge in investments in companies prioritising this approach to cover, which could mean tech-led innovations will continue changing the insurance game in the years ahead.

For an idea of what insurance policies which use insurtech look like, we’ve detailed an example of these for car and home insurance below.

Honey Home & Contents*
  • Smart home sensors, with 8% annual discount when in use
  • Satellite imagery used to avoid underinsurance

Insurtech is at the heart of the Honey home insurance model. When you take out a Honey policy, you’ll be sent sensors which are used as a home monitoring system to alert you to potentially damaging events like burst pipes and flooding, fires and break-ins. This can give you the opportunity to step in and prevent further damage to your property. And since Honey calculates this will reduce the likelihood of you making an insurance claim, they give policyholders who install and run the sensors an 8% premium discount every year.

KOBA Insurance Comprehensive Car Insurance*
  • Pay-per-km pricing with monthly monitoring
  • New car replacement (under 2 years old and 40,000km driven)
Find out more

This comprehensive car insurance policy from start-up provider Koba could be popular with Australians who don’t drive very often and want discounts to match. The company uses an onboard device that monitors the distance you drive, and sets each month’s premium accordingly (on top of a fixed monthly charge). The goal is to help you save on premiums while insuring you for damages you might cause to other vehicles and your own, including car replacement if it’s deemed a write-off (and is less than 2 years old and driven under 40,000km).

Policies become more flexible and personal

Flexibility and personalisation are at the centre of the digital wave hitting the insurance world, but it goes beyond technologically-enabled tracking. Some insurance providers now offer policies that don’t lock you into a year of cover. Instead, they let you pay premiums monthly and often opt-out with no cancellation fees if circumstances change and you don’t need cover (with the option to jump back into your policy when it suits).

An extreme example of this approach to health insurance is the injury cover offered by HCF-backed start-up, Flip. This new insurance provider offers between $200 and $20,000 for accidental injury claims (including dental injuries) that require minor medical treatment all the way up to permanent disabilities. 

You can opt-in for a single day of cover for $6 (or $9 per-week) with no waiting period and then cease cover at any time. It’s the kind of health insurance you might consider taking out if you’re about to go on a short but adventurous excursion. But before you go bungee jumping, make sure you read the Flip product disclosure statement to see the activities that aren’t covered, as well as other terms and conditions.

Keen to hear about flexible options when it comes to car insurance? Check out the policy below.

Rollin’ Comprehensive Car Insurance*
  • Excess-free windscreen and window glass repairs
  • Pay premiums monthly at no extra cost

Rollin' aims to keep cover as simple as possible for drivers, offering monthly payments at no extra cost and cover you can cancel freely any time. The policy covers costs for damages you might cause to other people’s property as well as injuries your own wheels sustain. There’s a simple $800 excess for all listed drivers, making this a good option for people under 25 who might otherwise face an additional young driver excess (but don’t forget unlisted drivers can still face up to $3,000 additional excess). And if your windscreen or window glass need repairing, you won’t have to pay any excess at all.

The impacts of climate change on insurance premiums

Some major insurance groups have been criticised for providing cover for oil and gas projects as the world calls for urgent climate action by the financial sector. But as a starting point, the insurance industry is beginning to accept the fact that climate change can negatively impact their profitability, as well as the planet. 

Insurance providers are trying to help mitigate disastrous weather conditions (and the related claims costs) caused by climate change by introducing their own climate action plans and supporting Indigenous-led climate resilience efforts. With the threat of some homes becoming uninsurable due to increasing fire and flooding probability, here’s hoping that more impactful change from more parties is on the horizon.

More transparency around changing insurance costs

The specific calculations which determine the cost of insurance are a bit of a mystery. We can point to the various factors which influence premiums, but at the end of the day each insurance provider sets their own prices, and customers are often left wondering why their bill has gone up.

But there’s good news on this front. From this year, drivers with a policy from a car insurance provider that subscribes to the Insurance Council of Australia’s Code of Practice will get a little more insight into the changing cost of car insurance. Basically, these providers will now display your previous year’s premium to compare it with what they’re charging as you’re about to renew the policy. 

The idea is that having this information immediately at hand will prompt policyholders to compare other insurance quotes if they’re not happy with their current option, and hopefully find the best-value cover for their needs. Perhaps the new year will bring homeowners a similar strategy for comparing their home insurance premiums at each renewal.

Want to start considering your options right now? Head to our home and contents insurance comparison page and comprehensive car insurance hub for details on a range of policies.

* Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.

^See information about the Mozo Experts Choice Home Insurance Awards