Top insurance industry issues in 2018
The changes we're seeing in the industry and our perspectives on how insurers can make disruption work to their advantage
Insurance is an industry under stress
According to the PwC's 20th CEO Survey, a higher percentage of insurance CEOs than those in any other industry are extremely concerned about the threats to their growth prospects from over-regulation, the speed of technological change, changing customer behavior and competition from new market entrants.
In short, the entire insurance business model is being disrupted. At PwC's Financial Services Audit and Risk Committee Forum (FSARCF), one-third of insurance attendees cited technology—including the new market entrants that are often behind technological change—and customers' expectations for 24-hour service as the most disruptive forces on the insurance business.
35% of the insurer directors in attendance said they think "the industry landscape will stay the same, but the players will change substantially in five to 10 years."
44% think that "most existing insurers will not survive, at least in their current form.”
Insurance issues we are exploring
We have released individual report sections on the following issues:
A new take on digital
In the age of digital modernization, it’s essential to include foundational shifts in culture, operating models and underlying architecture to ensure flexibility and agility in a constantly-changing market.
Recent core systems trends
Many insurers are not achieving the full benefits of expanding beyond core. We describe the many opportunities they can leverage to unlock a transformation’s full potential.
The deals environment
There were $9 billion in insurance deals in 2H 2017, down from $24.2 in 2H 2016, even though deal activity was similar. We expect 2018 deals activity will remain active, and in this report explain what's likely to drive it.
Being “fit for purpose”
New strategy and dated structure don’t fit together. This report shares some tips on how to capitalize on new opportunities and ensure that your insurance business is ready to embrace the future.
Opportunities in financial wellness
Why do customers seeking financial advice and guidance remain underserved? It’s important for insurers to understand what they really want—as opposed to focusing on current product capabilities—in order to properly deliver financial wellness solutions.
Group insurance
Investments and growth prospects in the $65 billion group insurance market are becoming more and more attractive. We explain how differentiated solutions are a key to success in the market.
Commercial insurance cost curve
Cost advantages have not historically driven commercial lines' performance, but times are changing. We provide context and a call to action for a market segment that is ripe for disruption.
The three Cs of commercial insurance
Commercial insurance is seeing increased customization of products, more reliance on direct-to-consumer models and greater economies of scale for an increasingly large number of market participants. Collectively, we categorize these trends into the “three Cs” of consolidation, customization and collaboration.
Expanding into small commercial insurance
The small commercial market is about to face profound change. Future success will require processes that support the speed and scalability required to handle a high volume of transactions.
Cognitive dissonance and the CRO
F. Scott Fitzgerald once said “The test of a first-rate intelligence is the ability to hold two opposed views in the mind at the same time and still retain the ability to function.” This is particularly true regarding the CRO.
IFRS 17’s impact on life products
This report goes into considerable detail about how IFRS 17 will impact management decisions, product design and risk management strategies for life and annuity products.
Operational impacts of recent US tax legislation
The December 22, 2017 Tax Cuts and Jobs Act (“the Act”) is the most sweeping piece of US tax legislation in over 30 years. It will provide short-term benefits for many insurers, but also will pose important long-term strategic questions.
The industry is proactively confronting these and other changes
- 44 percent of FSARCF insurance attendees said new market entrants, such as InsurTech companies, are potential business partners and insurance companies have been keen adopters of new core systems, AI and automated processes.
- The industry has been a hotbed of deals activity in recent years, which has resulted not just in consolidation but also in a play by outside investors who see promise in the industry.
- Even developments that, may not seem like major disruptors of business and operating models are inspiring many insurers to change even faster. For example, IFRS 17, an accounting standard and a desire to be “fit for purpose” are influencing many companies to examine how they do business and which products they offer.
PwC’s Audit and Risk Committee Forum - Insurance session audience survey
How PwC can help
We provide practice solutions for insurers:
- Business strategy, including the future of insurance
- Risk and capital management
- Policy administration, claims and billing transformation
- Actuarial
- Regulatory compliance
- Financial reporting, including insurance contracts, modernizing finance, actuarial and risk management functions and statutory accounting
- Taxation
