An industry in flux
As we’ve been exploring in our Insurance 2020 series, insurers face the challenge of how to capitalise on the growth potential created by a wealthier and longer living global population, while grappling with the accelerating and potentially disruptive impacts of technology, new regulation and fast changing customer expectations.
Sector leaders recognise the rapid changes in their marketplace
The latest CEO survey findings strongly echo the themes we’ve explored in Insurance 2020. Insurance CEOs see technological advances as the trend most likely to transform their businesses over the next five years, followed by demographic changes, and then shifts in global economic power.
Technology is the key driver
86% of insurance CEOs believe technological advances will transform their businesses in the next 3 to 5 years – more than any other factor. As the impact of technology continues to gather pace, sensor, big data and other new analytical techniques could prove to be a critical differentiator by transforming insurers’ ability to understand and respond to customers’ needs.
However, only 31% have completed or are executing change initiatives in the key area of data management and analytics.
But new capabilities aren’t coming quickly enough
Most insurance CEOs are making plans for change, but most have yet to put them into action. Less than 40% of industry leaders believe that their sales, IT, HR, R & D and customer service are well prepared for the transformational developments ahead. Fewer than 40% have initiated plans to capitalise on these trends in the key areas of distribution, data analytics and innovation capacity.
The urgency of responding to these challenges is heightened by the extent to which they’re opening the door to aggressive competition from other financial services sectors and a new breed of nimble, tech-enabled entrants. In fact, 50% of insurance CEOs see new market entrants as a potential business threat, far more than in any other FS sector.
Insurance CEOs see over-regulation as the biggest threat to growth
86% of insurance CEOs see over-regulation as an organisational threat. This is a higher percentage than in any other sector, and is far ahead of other perceived threats.
How to get ahead of the game
What once seemed to be far in the future is becoming reality in today’s insurance marketplace. The digital experience is increasingly defining service standards and new analytical techniques are offering the opportunity to more effectively price coverage and control risks.
The insurers who take advantage of these developments will have clear insights into how the marketplace is changing, where they’re best able to compete, and be agile and decisive enough to respond quickly to important challenges and opportunities. They also will use the latest developments in technology to enhance customer profiling, reduce costs, and improve customer experience.
86% of insurance CEOs believe technological advances will transform their businesses in the next 3 to 5 years – more than any other factor.
50% of insurance CEOs see new market entrants as a potential business threat – considerably more than any other financial services sector.
How concerned are you about the following potential business threats to your organisation? - Speed of technological change