The insurance industry must strike the right balance between achieving operational excellence and investing in technology-led innovation, according to a report by global consultancy firm EY.
With insurance growth remaining stagnant for another year due to low interest rates, the shifts in consumer demographics around the world coupled with heightened expectations for digital experiences present insurers with risks and opportunities, according to the EY Insurance Outlook 2020 report.
The study revealed that most insurers agree that talent is the ‘secret sauce’ to maximise returns on investments in technology, digital transformation and new business models. But with the industry struggling to attract the right talent, the report found that insurers need to either reposition themselves as technology firms or proactively communicate why the industry matters, what value it brings to society, and the overall appeal of an insurance career.
“In an industry that impacts our lives every day – from natural catastrophes to cyber-risks to better health outcomes – and in an increasing digital world, being more customer-centric and improving the customer experience is an imperative,” said Isabelle Santenac, EY global insurance leader. “Considering the emergence of new risks, insurers should focus on risk prevention in addition to risk management. Attracting and retaining the right talent, as well as reskilling the existing workforce, will be essential in this transformational journey.”
The report outlined the following goals that both life and non-life insurers must prioritise in the near future:
- Achieving operational excellence and cost efficiency
- Managing regulatory pressures
- Digitising distribution
- Mastering emerging and disruptive technology
- Navigating the risks and opportunities of climate change
Despite seemingly sound industry fundamentals, Asia-Pacific is hounded by regulatory and economic uncertainties, and country-specific issues are clouding the region’s outlook and creating some challenges, it is suggested.
According to the report, insurers should leverage the advantage of a relatively young and growing middle class by embracing new technologies. This, in turn, will reduce their cost base and modernise distribution by strengthening direct-to-consumer propositions and leveraging regulatory change to streamline operations.
“The Asia-Pacific region is a major contributor to the future growth of the insurance industry. The region is still riding a strong growth spurt, driven by China, but also buoyed by positive performance in South Korea,” said Grant Peters, EY Asia-Pacific insurance leader. “However, mature markets present challenges with an aging population and shifting consumer expectations. No other market is as diverse in terms of opportunity and maturity – which poses an exciting challenge for insurers in this region.”