- Digital transformation critical to optimize costs, innovate and drive agility
- Digital and direct distribution channels imperative for growth
- Life insurers must address all aspects of financial wellness
While global life and property and casualty (P&C) insurance show sluggish growth overall, non-life/P&C insurance has shown considerably higher performance in Americas and Asia- Pacific markets. Life insurers are facing growth challenges globally due to regulatory issues, outdated distribution and lack of relevant products to the changing customer needs. To address these challenges the EY Insurance Outlook 2019 report lays out specific strategic and tactical actions that include expanding the product value proposition toward financial wellness, partnering with InsurTech companies for wider reach, and digital transformation to support innovation and speed to market, while companies need to innovate and develop new products, rather than just secure regulatory compliance.
The EY Insurance Outlook 2019 has, among others, recommended the following top imperatives for companies in the sector to facilitate growth and profitability:
- Digital transformation is no longer optional, but necessary to optimize costs and invest in relevant, innovative areas
- Blockchain for authentication, underwriting and claims attribution
- IoT for accurately underwriting policies using real-time data and reducing or eliminating claims using allied services
- AI for enhancing customer experience cost-efficiently and streamlining claims management, especially for simpler cases (e.g., auto damage)
- Distribution: think human and digital – not human or digital
Insurers often find themselves grappling with the challenge of what role to play in an emerging technology-driven ecosystem and how to work with InsurTechs. The report finds that an imperative for insurers is to make the critical decision about what capabilities they should own and manage themselves and what to outsource. Further, insurers must digitize their antiquated customer experiences and develop a streamlined proposition, supplemented by new advisory services that will build trust and further cement customer loyalty.
- Life insurers key value proposition: financial wellness, not just insurance
The report suggests that to remain viable, life insurance products must dramatically change and become something consumers understand, want and value. To address this shift in generational views requires a multipronged strategy focused on holistic financial wellness for example, new affordable and relevant products must be developed that cater to all aspects of financial wellness including protection, retirement and health, and even provide the means to manage day-to-day finances. Further effective communication and education are imperative to build traction.
Commenting on the findings of the survey, Savvas Pentaris, Partner and Head of Financial Services, of EY Cyprus said: "Insurance companies throughout the world and in Cyprus are faced with a new environment of reduced growth rates in their core business and ever-changing needs and expectations of consumers. This is a threat and an opportunity. Insurance companies can rise to this challenge by redesigning their business model, focusing on new distribution channels and utilizing digital technology to provide their customers with the modern services and the experience they are seeking."
For more information and to download the report, visit EY Insurance Outlook 2019