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?