Surely, the insurance industry is one of the biggest out there. The revenue made by this industry has already reached over 5 trillion US dollars and it’s still on an upward trend. 2020 is already here and many already have their predictions when it comes to how the industry will do this year and even the next few years.
The main concern that insurance and insurers have is mainly change. Insurance firms are expected to fight, adapt, be effective, and quickly move when it comes to this if they want to remain strong in the next few years.
Auditing and consulting company Deloitte recently has a new campaign called A Demanding Future: The Four Trends that Define Insurance in 2020. Deloitte was able to survey 200 CEOs, CFOs, CROs, and CTOs from sectors like life and annuity insurers, Property and Casualty (P&C), and reinsurance.
With this, Deloitte was able to identify trends in the insurance industry that could help determine companies or insurers that would stay as strong players in the industry.
Since change is inevitable, the insurers should be able to see the necessary changes that they need to make to ensure that their customers will remain with them or that they get new customers. Immediacy, engagement, and overall experience all play as important factors to ensure this.
Customers nowadays are looking for ways to make things simpler and easier. Efficient application processes or streamlined applications are becoming quite the trend. More people are now seeking the help of companies like Garrity Insurance to make their search easy and even quick. Insurers should know this so that they can improve how such agencies are helping not only their customers but also their own companies.
Insurance providers should focus on rethinking the tools that they have instead of rewriting the rules to be able to thrive. New technologies such as blockchain-enabled smart contracts and robo-advisers are also seen as incoming trends in the industry.
Basically, insurers should make ways to be innovative when it comes to these things. They should also start seeing customers as customers and not just as data. This is why better engagement is seen as an important factor to ensure that an insurer survives.
Making their customers loyal should be their main goal. At the end of the day, loyalty can help bring in more customers too. They could even consider offering non-insurance products to make their customers remain enticed about getting their services.
Rich Sega, the global chief investment strategist of Conning, also shared his thoughts on the future of the insurance companies in an interview with Insurance Business. He said that the most pressing concern for insurance managers today revolves around income.
This has been the case since the end of the recession and he hasn’t seen much change since then. He even thinks that the situation may even get worse in the next few years. Sega said, “I don’t think anybody was expecting huge increases in rates, but last year… it looked to the insurance industry that we might start getting a little bit of an upward creep in rates which would start to relieve some of the pressure on earnings.”
With regard to the health insurance sector in the industry, Sega said that there may be a threat to this, especially in the US. This is because of the political questions about how the US will go about the Affordable Care Act.
Meanwhile, the life insurance industry didn’t seem to have much change, according to him. This sector of the industry remains to be under pressure in terms of the long-term rates that have been low for quite a while now.
The P&C sector, however, is facing some challenges because of the passing of a tax reform law. This took away some of the advantages in the portfolio structures that the industry has used the municipal bonds. The expectation of problems like big hurricanes this year can also be a problem.
What Sega wanted to also emphasize is that sustainability is going to be a strong topic in the insurance industry throughout this year. Countries in Europe, the UK, and even North America are already talking about this.
Sustainability affects environmental risks and this can very much determine the future of the insurance and even the banking industries. The increased awareness of the public that concerns sustainability will lead to increased regulation, Sega said.
Sega hopes that companies would make real efforts to improve regulations that concern this. He hopes that companies don’t see sustainability action plans as some sort of box-checking exercise that is only found necessary because statistics said so.