Michael Cook, Partner and Claims Advisory Leader at PwC UK, has said that he expects to see a “divergence” in the strategies employed by run-off insurers in the coming years, as more firms begin to favor short-term agility as an alternative to longer-term stability.
Cook addressed the industry during a briefing at the 2022 RVS event in Monte Carlo this week, which accompanied the launch of PwC’s Global Insurance Run-Off Survey report.
Among the main findings of the survey, PwC reported that the global non-life run-off market continues to grow, with estimated liabilities having risen 11% to $960bn since the beginning of 2021.
And the outlook shared by the collection of speakers at the briefing was equally optimistic on the prospects for further growth, with Global Insurance Leader for PwC UK Jim Bichard declaring that the market has “never been in better shape.”
Rounding off the event, Cook’s comments focused on the different ways that insurers might chose to take advantage of the growth opportunities in run-off as the market heads into 2023 and beyond.
In particular, he highlighted how firms will have to re-evaluate their operating models, and how many legacy providers are opting to replicate the life market in many aspects.
“That’s a completely different proposition for the legacy sector than it used to be. It’s a genuine shift in the industry,” Cook told attendees at the briefing in Monaco.
“So how do you make sure that you are also modernizing,” he posited. “That’s where for me the change around the investments and the thinking needs to further evolve, as it has over the last couple of years in operating models. Because the operating model is going to have to have increased flexibility.”
“I think what we’re going to start to see is a divergence in the market in this context,” Cook continued. “We’re going to see people who are going to build based on their strategy. They’re going have a clear strategy in terms of the transactions, and they will execute very well on that strategy. But they will build their operations to match that.”
“I think there’s going to be a second group which is going to be far more fleet of foot,” he added. “People are going to be far more agile about what they go after, and they’re going to look at that broader deal volume. But for those folks, there is going to be a wider transformation that’s going to be required. Because it’s really hard to have that kind of agility when you’ve got an older creeping operating model.”
Cook spoke to the need for insurers in the legacy market to modernise their technologies and working practices, to prevent a “lagging behind” as the front end of the business progresses further away.
“You’ve got to bring that operational piece with you. Because if you’ve don’t, it ends up in a mess. And that’s not a good place for anybody. So I think we will start to see a group of companies just like we’ve seen in the in the life sector look more and more towards that transformation of their business … And they will be the people who are better equipped to respond to those new and changing demands,” he concluded.
