Analysts at EY have argued that the global re/insurance is “poised for a period of purposeful growth,” despite daunting macroeconomic and structural challenges, fierce competition and ongoing tech-driven disruptions.
After the dramatic developments of the last few years, EY believes re/insurers have shown they can undertake large-scale change at a faster pace than many industry veterans thought possible and can deal with unexpected developments.
COVID in particular posed an acute challenge to re/insurers, but also demonstrated why the industry is so essential, EY says, both to global economic health and increased financial wellness.
The 2022 edition of EY’s annual Global Insurance Outlook series reflects the dynamic and purpose-driven moment for the industry, focusing on open insurance and ecosystems, workforce transformation and sustainability.
Though these three powerful trends are currently shaping the market, EY also sees other areas where insurers are encountering compelling opportunities and, potentially, severe risks.
Cost and capital optimization, for instance, remain imperative, as evidenced by recent strategic divestments of many leading insurers.
Meanwhile, analysts stress that life insurers must shrewdly invest the gains in premium growth in recent years, while P&C insurers should take advantage of a hardening market.
Other key themes of the insurance outlook focused on the need for companies to continue to address their technology debt by digitizing core processes, migrating to the cloud and embracing flexible sourcing models.
Going forward, EY anticipates that carriers will look to partner with or acquire the most promising InsurTechs, and banks and asset managers will offer more protection products and seek to differentiate on holistic financial wellness value propositions, forcing insurers to choose between collaboration and competition.
“The insurance industry must seek to lead with purpose and live up to its highest aspirations, particularly in the wake of the COVID-19 pandemic,” EY concluded.
“Insurers had to be there for customers and undertook large-scale change quickly to make sure they could serve people in need – and they must continue to do so, particularly if they are to help the world prepare for increasing climate risk.”