Deloitte Insurers Change is accelerating all around us, possibly at a faster pace than in any period in history. Shifts in climate, technology, workforce, and customer/societal expectations combined with macroeconomic and geopolitical volatility are compelling enterprises across the globe to transform their tech infrastructure, products and services, business models, and organizational culture to adapt not just to fuel profitability but to remain relevant and survive. The insurance industry is no exception. In fact, these colliding forces could potentially be the catalyst that sparks reinvention both in how the industry conducts its business and in its overall purpose and role in society.
Insurers have the potential to achieve even greater social good largely because they already act as society’s “financial safety net,” providing a backstop against financial loss for innumerable risks worldwide. However, more insurers are realizing they have a bigger role to play in helping prevent risk, mitigating loss severity, and closing life and non-life protection gaps in global markets, especially in the face of the growing number of what appear to be financially unsupportable risks.
Existential threats, such as catastrophic climate change, the explosion in cybercrime, and concern over vast uninsured and underinsured populations, are driving many insurers to reimagine how to confront disruptions caused by the changing environment and help consumers across all segments prevent or mitigate risks before they occur, rather than merely paying to rebuild and recover after the fact. Even while the most extreme events may appear unavoidable, insurance combined with proactive risk management can still help minimize the degree of their impact on affected individuals and communities.
To achieve this level of transformation, insurance companies may need to adopt new technology, including generative AI, to harvest actionable insights from any new data at the industry’s disposal. Industry convergence for access to more information sources, products, and services, as well as talent with the skill sets and know-how of emerging capabilities are becoming table stakes.
Transformative change will likely have to go beyond adding new tech bells and whistles. More proactive insurers are also beginning to embrace enterprise wide culture change to reduce silos, elevate their talent, and achieve a more ubiquitous focus on customer-centricity. For global insurers, this may include rethinking how capabilities are shared across geographies and business lines to help drive a more consistent and integrated customer experience.
Leaders should make an ongoing commitment to ensure diversity, equity, and inclusion (DEI), both in their workforce and the customer demographics they serve. Demonstrating such commitment could help close the trust gap that has often undermined the industry’s credibility with key stakeholders, including regulators, legislators, and rating agencies, as well as society at large, and even their own employees. This could not only prove to be a differentiator in the market, but also help resolve societal issues such as the insurance protection gap.
Earning recognition as sound ethical and financial stewards of societal welfare could ultimately empower insurance companies and their distribution force to shift away from a transactional role to adopt a broader, more holistic, relationship-based approach to consumer interactions. This transformation should not only promote insurers’ growth prospects but could also fundamentally elevate the perception of the industry’s role in protecting and enriching the ever-evolving world.
For the third straight year, the non-life insurance sector is boosting top-line growth with higher-than-average price increases across nearly all lines of business—yet rising loss costs are making bottom-line profitability elusive for many carriers and the industry as a whole. The one-two punch of elevated inflation and catastrophic events could help fuel transformation in the way the sector interacts with consumers.
For the third straight year, the non-life insurance sector is boosting top-line growth with higher-than-average price increases across nearly all lines of business—yet rising loss costs are making bottom-line profitability elusive for many carriers and the industry as a whole. The one-two punch of elevated inflation and catastrophic events could help fuel transformation in the way the sector interacts with consumers.
The ever-expanding use of AI—not just by insurers but also by their customers—presents its own emerging coverage challenges and opportunities. Munich Re, for example, has launched a policy to cover those implementing self-developed AI programs in their own companies, mitigating potential financial losses from AI underperformance. Insurers can also consider using AI to help clients reduce or mitigate risks.
This shift may be challenging, as many carriers continue to struggle with networks of legacy systems and siloed lines of business, products, processes, and culture. However, these obstacles are not expected to be insurmountable.
Like non-life carriers, cutting-edge technology, including digital tools and advanced analytics, could help empower life insurers and their agents to shift away from a transactional role to broader relationship-based consumer interactions. Modernizing systems can potentially facilitate the use of alternative data sources for faster application underwriting and processing, more seamless cross-selling and customer personalization and ease of engagement, as well as rapid new-product launches.
It could also enable better connectivity and collaboration with industry and nonindustry partners across the value chain, both to enhance customer experience and drive more sources of profitable growth. Such collaborations could include services for lead generation, as well as ancillary products to provide holistic coverage (wellness, wealth, health, etc.) capabilities.
For example, in Asia-Pacific, insurers are investing in technology platforms and ecosystem partners to improve the customer experience for health and benefits offerings. AIA launched an integrated health strategy across Asia, to simplify customer journeys powered by technology solutions, analytics, and a cohesive ecosystem of payers, providers and partners. In Singapore, Manulife worked with a large Singaporean bank to provide low-cost, customizable protection products across life, health, and wealth to young Singaporeans.
Most respondents also say they will use cloud capabilities for new solutions related to core modernization. This solution can enable business continuity and potentially offers easier scalability, greater agility, lower IT operating costs, and increased security. Socotra is one example of a cloud-native core platform that enables insurers to more rapidly develop and deploy new life insurance products.
Adding technology capabilities can also potentially lead to increased opportunities to connect more effectively and efficiently with enormous underpenetrated global life insurance markets. The SRI mortality resilience index indicates that more than 50% of the world’s financial needs remain unprotected in the event of the death of the financial head of the household58 and emerging economies account for most of that gap.
One key strategy to increasing penetration in underserved markets may be adopting digital capabilities to more effectively enable partnerships. Catalyst Fund’s portfolio company Turaco was able to reach over 70,000 gig-economy workers in Kenya and Uganda by offering life and health insurance coverage through partnerships with digital ride-hailing platforms…