To paraphrase a famous line from literature, the insurance industry today faces both the best of times and worst of times. There are certainly significant challenges – historically low interest rates, little or no growth, the increasing frequency and cost of natural catastrophes, intensifying regulation and new competition from non-traditional players.
But at the same time, we see ample room for innovation and growth. There are compelling transformative opportunities across the business. To seize these opportunities, insurers will need to adjust their business models, use technology and data more effectively, and develop the new products that people, businesses and society need.
The annual EY Insurance Outlooks represent the organization’s perspective on the issues shaping the industry in the near term. This year’s report was developed based on our deep sector knowledge, a survey of the entire global insurance practice and a variety of inputs from global and regional insurance leadership, selected clients and external analysts. The global, regional and individual country reports complement the NextWave series, which takes a longer-term perspective (five years and beyond) and examines specific market scenarios that will shape the future of the industry.
The challenging context
This year’s Global Insurance Outlook (pdf) report highlights a unique moment for the industry. Never before have such significant risks and great potential existed side by side.
Low interest rates
Low interest rates, stagnant growth and the likelihood of a global recession place real pressure not only on insurers’ bottom lines, but also on their strategic plans and transformation programs. The days of relying on investment returns as the main source of profitability are over. Geopolitical uncertainty, trade tensions and decreasing penetration also complicate the industry’s prospects. Still, despite the cost pressures, insurers can’t afford to lose sight of the need for innovation and forward-looking investment.