With the insurance landscape undergoing massive disruption due to technology and geo-political developments, a report by professional services giant EY has listed eight predictions about the future of the insurance industry in the next five to 10 years.
The report, titled ‘NextWave Insurance: personal lines and small commercial’, is based on industry research, analysis of the financial performance of various insurers, and ongoing conversations with industry leaders and stakeholders, according to a statement from EY.
The eight market scenarios put forward by the report are:
It also examines the impact of data, trust, ethics, climate change, diversity, talent, technology and new operating models in the areas of risk and climate change, and the opportunity for insurance inclusion.
According to EY, disruption caused by climate change will have a significant impact in the near future, and this could potentially diminish traditional lines of business and revenue sources. The report called on insurers to be aware of innovators – including non-insurers – that may view crises as opportunities to enter the business, either directly or through partnerships with incumbents.
Also, insurers must find ways to further engage younger consumers to help protect the many underinsured consumers and businesses worldwide. The report said that Asia-Pacific holds the most diverse insurance market with wide variations of customer demographics and market penetration. This means that multinational insurers should take note of the creativity exhibited by insurers in emerging markets to connect to the underinsured, such as using smartphones to provide micro-insurance, asset-based coverages, and embedded insurance purchases.
“These scenarios highlight more than ever that insurers need to focus on the evolving needs of their customers, and how customer needs will continue to change into the future,” said Grant Peters, EY Asia-Pacific insurance sector leader.
“Asia-Pacific is an extremely diverse region in terms of market maturity, insurance penetration and the adoption of new technologies,” he added. “Insurers need to recognize the changing demographics across the region and meet multiple customer needs through more targeted value propositions, product innovation and omni-channel distribution strategies. With disruption coming from all angles, those that don’t prepare now will get left behind.”