The four trends that define insurance in 2020
A demanding future
Today growth is challenging, margins are tight, costs are strained, environmental risks are changing, and regulation continues to weigh heavy. The future will bring change – this study highlights four key areas in which we expect to see this. Simon Walpole, Insurance Lead Partner
Through honest conversations with over 200 C-suite insurance executives throughout EMEA, we have worked with Financial Times Remark to identify and analyse four key insurance trends that will shape the future of the industry as we know it.
View the executive summary for the report overview. Access the full report below for an in-depth analysis of each chapter, and what this means for your business.
Explore and request the deep dives
In a new world with new customers expecting new solutions, how are insurers meeting new requirements?
This deep dive speaks about why the industry has to extend beyond its core products and services and find new ways to engage with the customers in order to maintain customer loyalty - this is especially true for the Swiss insurance market.
In an age of disruption, insurers clearly understand that their customer proposition needs to change and adapt to new demands in a digital era. Nearly half of the C-suite insurance executives we spoke to felt that changing customer needs would be the top challenge for the next three years.
The insurance sector is changing and this in part due to increasing and changing customer demands. This has led to the consumers being an important factor of growth within the industry.
There is now a new world that insurance firms need to compete in, from persistently low-interest rates to new technology in the insurance industry, as well as the threat of new entrants who are enabling lower operating costs, all of which have contributed to the need for new and more flexible ways of interacting with customers.
In chapter one we explore why insurers should be offering new products and solutions such as non-insurance products, ensuring friendly and knowledgeable staff are always on hand and finding new ways of working as ways to interact, attract and retain customers.
The three steps to new age success
It is clear that customer needs and expectations are changing – and they will continue to do so, possibly at an even more rapid pace. Those that view this as an opportunity to combine insurance and technology by providing new and innovative products, services and delivery channels will be the winners in what will be a different market in years to come.
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Challenging the status quo is no longer optional
Particularly Swiss insurance companies operating in one of the highest penetrated global insurance markets will need to define a new roadmap for growth and to tap into revenue and profit pools.
The traditional approach of selling protective products is nowhere near enough for the insurer of the future. Digital disruption and demanding customers mean that insurers need to innovate to stay relevant within their own industry.
We reveal how the insurance industry is searching for growth – be that through new service-based models, innovative products or a greater focus on prevention.
Remaining relevant through the digital transformation trends in insurance and demanding customers is a major challenge for the sector. To ensure a successful future the sector has increased service-based businesses and introduced new propositions - many of which were not available five years ago. Both are examples of generating growth and increasing revenue. When looking at new roadmaps for growth the industry should look to China, which has been identified as the fastest-growing market for insurance.
In chapter two we reveal how the industry is searching for growth through a different road map for growth.
The three drivers of growth
The foundations of the insurance industry are based on products that help protect customers from loss as a result of unexpected events. While this will always remain an element of what insurers do, we are currently seeing a technology-driven shift away from this traditional, largely reactive model to a more proactive approach which aims to merge established insurance conventions and technology.
What is going to have the biggest impact on the industry?
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Strategic alliances are still on the agenda for growth
In a highly competitive environment, incumbent firms can no longer rely on organic growth or internal innovation. The winners will be those that can forge alliances with innovative start-ups; ally with InsurTech; and consolidate with their peers.
A rapidly changing industry will require unprecedented deal making skills. We reveal how the industry will use M&A, equity partnerships and alliances to advance growth.
Global M&A deal volumes hit unprecedented highs in 2018 and companies have sought growth, access to new markets and products and - increasingly - technology. Against this backdrop, deal activity has figured strongly in the commercial insurance industry trends, and respondents agree that more than half of growth within insurance in the next five years will be a result of M&A. As a result that this will form part of companies long term growth strategies. However, this is not always straightforward as only a quarter of respondents felt they were effective at integrating the target in their last deal.
In chapter three we examine how the industry will use M&A, partnerships and alliances to advance growth as the negotiating table beckons.
The four steps to successful integration
Poorly integrated businesses fail to achieve expected synergies and are at least in part responsible for the complex organisational and technology structures in place that are currently holding back many insurers’ attempts to keep up with more nimble competitors. Integration success requires detailed planning ahead of the deal closing and swift action thereafter.
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Implementing technology the right way
Swiss insurers start to realise that the implementation of customer centricity requires fundamental changes of their business, data and IT architecture.
Disruption from new technologies is a given, but acknowledging it and acting on it are very different propositions. Insurers will need to move far more quickly to create truly digital organisations if they are to compete in a market that is set for rapid transformation.
Understand how insurance companies can begin to deploy the right technology for the right purpose to avoid being left behind.
Rapid advances across a whole range of technologies are enabling industries to do more for their customers - and to do it faster and cheaper. Financial services, in particular, are seeing significant disruption, however, there is confidence in the industry as the majority believe that the industry is moving fast enough to keep up with future technology trends. Along with this advanced analytics is expected to increase over the next three years. Despite this compliance will become more of a challenge when adjusting to digital disruption.
In the fourth chapter, we explain how insurance companies can begin to deploy the right technology for the right purpose to avoid being left behind.
The seven steps to digital transformation
Insurers need to think carefully about the best way to acquire new technologies and intellectual property. They will need to decide whether in-house resources, a partnership approach or an outright acquisition represents the best way forward.
To achieve holistic technology and business transformation, we have outlined seven steps that insurers should follow.