Reimagining the Insurance Market.

The last two years had a noticeable impact, with premium growth sales slowing down, and the London Market made challenging pandemic losses. The market is steadily recovering, though the need to fix the pre-existing challenges the industry faced last year is now more than ever.

The challenges run deep –
  • Insurtechs are at the forefront of digital innovation and shaking up the industry. With a continued fight for the customer, insurtechs have focused on digital enhancements in the client experience and removing their pain points. This poses a competitive threat through superior technology, rather than the traditional methods of many insurers.
  • Brokers have a position of strength in the insurance value chain. Total shareholder returns are much higher for brokers than in other industry segments and are gaining private equity investment. As insurers do not control their distribution channels as tightly as other financial sectors, they might run an even greater risk of becoming pure balance-sheet providers. At the same time, intermediaries keep an asset-light client relationship model. The shift toward digital is perhaps the last chance for insurers to regain the upper hand in retaining and growing their customer base.
  • Many insurers undertook cost-saving programs, and the aggregated results have been low with limited productivity improvements. For many insurers, the expense ratios did not move and potentially rose, which has been disappointing considering the need for a productivity increase.

So how does the insurance industry manoeuvre out of this standstill? How do insurers improve the customer experience? And most importantly, I believe, we need to attract and retain bright talent post-pandemic.

The big question for me is, do insurers need to reimagine the role and purpose of insurance in society?

In my opinion, some key things could help in answering these questions –
  • ESG (environmental, social and governance) considerations need to be a core feature of insurers’ business model. For example, consider climate risk in their new products, the underwriting process and customer experience.
  • Larger investments into the emerging and evolving risks, such as cyber and machine learning/AI. The work is fast-changing, and some of the substantial risks are still left uninsured. We need new products, new risk considerations, and a standstill industry willing to be risk-seeking by innovating.
  • Engage with ecosystems. The shift towards digital footprints is the buzz. Traditional insurance practices fall short of remaining competitive and fast responding to market changes (think COVID-19 when Lloyd’s boxes were empty for around 2 years). Ecosystems will greatly influence the future of insurers. r10 has seen a positive impact with our Partner Ecosystem to the London Market.
  • If we modernise the core technology platforms, both front-end digitalisation and back-end policy admin, claims and finance systems will enhance the customer experience and operational productivity gains in performance. Legacy systems must be able to support the digital front-end capabilities, and some are decades old, so many insurers should consider replacing core systems with tech platforms that support the requirements of the digital age.

We need better data and analytical capabilities across the value chain. Studies have shown that improvements in this area have improved loss ratios by 3-5%, new business premiums increase 10- 15%, and retention is profitable. The industry can move towards predicting and preventing every aspect of the industry. In the process, brokers, consumers, financial intermediaries, insurers, and suppliers can adapt to advanced technologies to enhance decision-making and productivity, lower costs, and optimise the customer experience.

  • Remaining culturally diverse and inclusive. There is no reason for insurance companies not to put 100% of their efforts into this work. The industry seeks to protect individuals, communities, businesses, and governments from the various risks. It’s now the time to put concrete ED&I strategies at the top of the agenda, evaluate what’s working and what isn’t, and be forthright about the changes that companies want to see within their own ranks.

About the Author.

Stephanie Ballie is a Senior Manager, and as a Business Analysis expert, she leads the r10 capability. She is always working towards upskilling to push more initiatives internally and add more value to our clients. r10’s Business Analysis function specialises in providing business analysis for clients’ systems and business transformation strategies. Our extensive analysis of business process and strategy improvements help to understand the root causes and gather the requirements and solution initiatives to improve operation and systems and strengthen our clients’ position in the market.


Stephanie Ballie

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