After the dramatic developments of the last few years, insurers have shown they can undertake large-scale change at a faster pace than many industry veterans thought possible and can deal with unexpected developments. We believe the industry is poised for a period of purposeful growth, despite daunting macroeconomic and structural challenges, fierce competition and ongoing tech-driven disruptions.
COVID-19 demonstrated why the insurance industry is essential – not only to global economic health and increased financial wellness, but also to protect what people value most. The decisions and actions leaders take today can meaningfully influence the future of the industry and the lives and livelihoods of billions of people around the globe.
The 2022 edition of EY’s annual Global Insurance Outlook series reflects the dynamic and purpose-driven moment for the industry, focusing on open insurance and ecosystems, workforce transformation and sustainability. Though these three especially powerful trends are currently shaping the market, there are also other areas where insurers are encountering compelling opportunities and, potentially, severe risks. Cost and capital optimization remain imperative, as evidenced by recent strategic divestments of many leading insurers. Life insurers must shrewdly invest the gains in premium growth in recent years, while P&C insurers should take advantage of a hardening market.
Insurers must continue to address their technology debt by digitizing core processes, migrating to the cloud and embracing flexible sourcing models. The current landscape is also notable for its fragmentation; convergence and intense competition, including from a mix of non-traditional players; and widespread collaboration. Carriers will look to partner with or acquire the most promising InsurTechs, and banks and asset managers will offer more protection products and seek to differentiate on holistic financial wellness value propositions, forcing insurers to choose between collaboration and competition.
Finally, the insurance industry must seek to lead with purpose and live up to its highest aspirations, particularly in the wake of the COVID-19 pandemic. Insurers had to be there for customers and undertook large-scale change quickly to make sure they could serve people in need – and they must continue to do so, particularly if they are to help the world prepare for increasing climate risk.