After dealing with the Covid 19 pandemic, the insurance industry showcased an ability to deal with change faster than industry insiders anticipated. The resilience shown by the industry has encouraged analysts to project a period of meaningful growth despite the tough challenges currently present in the industry.
Covid 19 provided a practical insight into the requirement of the insurance industry for global prosperity. Besides its positive impact on global economic prosperity, insurance also provides value by protecting valuable assets for consumers worldwide. The decisions taken by leaders in the insurance industry can have a massive impact on the lives of billions of people. Looking ahead, sustainability, technological disruption, and open insurance seem to be the three critical factors impacting the industry’s growth.
Insurance companies need to focus on their existing technological requirements by digitalizing existing procedures and adopting digital tools to improve operational performance. Cloud migrations and flexible sourcing are integral for the industry to persist forward and pave its way in a competitive global landscape. DIF recommends insurance companies optimize premium gains in recent years by investing in the fundamental dynamics of the market. Companies also need to continue their adaptability from the pandemic to serve the needs of millions of new customers at scale, given the risks posed by the climate change crisis.
Key Growth Factors for the Industry in 2022
This year presents the insurance industry with the opportunity to adapt based on changing trends and align its structure to meet the requirements of the future. Here are some key growth factors that can accelerate the development of the industry this year.
Sustainability – Cultivating Purposeful Growth
With the brunt of the Covid 19 pandemic waning down, corporate leaders are looking at sustainability and climate change as the biggest priorities. Before the pandemic, the bulk of sustainability discussions was focused on theoretical elements of change. However, today, companies are transforming their approaches to ensure that sustainability is central in decision-making. Insurance companies are taking comprehensive steps based on advanced metrics to ensure that they are taking action on ESG issues and sustainability practices.
Given the nature of the insurance sector, the primary focus of the efforts is on the environmental part of the equation. Climate change is expected to exert a detrimental toll on industry segments around the globe. This will subsequently affect the financial performance of the insurance industry. Companies need to reevaluate their directives to shift towards sustainability and take meaningful steps to accelerate the shift to a net-zero economy. Established actionable plans and tracking performance through metrics are essential to achieve the desired results for the industry.
Industry leaders also need to explore focus areas in the ESG segment to explore how strategies can be implemented in the future. Performance tracking in the ESG segment should be focused on value generation and risk monitoring. Standardized disclosures within the industry will pave the way to seamless access to capital and improved customer trust.
Technological Disruption – Paving the Way to a Workforce Transformation
In the past, insurance companies held the view that employees would lose their jobs with the development and improvement in available technology. However, recent signs of progress along with the learning outcomes from the Covid 19 pandemic have pointed to an entirely different landscape. The landscape of the pandemic has forced companies to explore new digital working mechanisms.
Remote work is being increasingly embraced as the way of the future with companies coming to terms with the new normal. Business leaders are capitalizing on the changes from the pandemic by shifting away from expensive offices spaces and empowering employees to shift to digital working. These changes have been accompanied by dynamic training programs and agile working mechanisms to retain workers and enhance productivity.
Due to the great resignation and shift to digital working, insurance companies need to explore viable incentives to attract talent and become leading choice employers for talent in the country. Companies in the insurance segment will also need to take strong positions on diversity and pressing social issues to attract newer generations of workers that are deeply involved in the social segment. Inclusion, diversity, and sustainability are the most important areas in the existing landscape as upcoming generations of workers continue to define the new nature of the markets.
Open Insurance – Shift to an Adaptable Model
The growth of open finance has emerged as one of the most critical learning experiences from the past few years. Across all business segments, it is becoming increasingly important to offer customized options based on the transforming needs of customers. The insurance industry will need to optimize its directive by exploring transparent and customized insurances options to match the changing requirements of modern audiences. Companies need to allow consumers to review their insurance approaches with changes needs and review their existing product offerings.
Digital insurance products need to be re-optimized with API integrations to accommodate secure connectivity with leading partners. Existing trends point to the ecosystem’s growth as a cornerstone of the insurance industry. DIF recommends industry leaders adopt a proactive approach in the implementation of improved solutions instead of waiting for regulators to provide insight on the structure of the changes. Transitioning to open insurance models will allow companies to attract modern consumers and improve public sentiment with increased transparency around existing products and solutions.
A top-down leadership approach is essential to dictate the shift to a new dynamic. Companies need to evaluate their talent pools, technology resources, and business models to readapt their product offerings in the modern era. Despite the clear market advantages offered by broader ecosystems, the industry is still struggling to develop the required technological framework and capabilities to cater to newer requirements. Distribution constraints and organizational culture are still significant barriers in expanding the outreach out of the industry beyond its conventional marketing and management model.
DIF strongly believes that sustainability, technological disruption, and open insurance are the cornerstones of the industry this year. We believe that industry leaders can capitalize on these factors to unlock broader growth and improve corporate connectivity with customers on social platforms and beyond. There is also a strong need to accelerate the development of ecosystem solutions to capitalize on the benefits of an integrated approach.