Key messages :-

The insurance sector's ability and preparedness to respond as society's "financial safety nets" are coming under more and more scrutiny due to the increasing frequency and severity of global hazards, such as cybercrime and climate change.

The majority of insurers are launching transformation initiatives to try and stop losses from occurring in the first place as they realize that simply responding to risks might not be sufficient.

To assist reduce segregated encounters, improve employee collaboration, and expand accessibility of Insurers are transforming to achieve customer-centricity and elevate purpose data, this change to a more customer-centric business model will probably involve sophisticated technology adoption and company culture modification—but skill sets may need to be enhanced.

Since Q2 2022, merger and acquisition (M&A) activity has decreased, mostly as a result of macroeconomic concerns. But as inflation and interest rate rises decline, pent-up demand.

Insurers are transforming to achieve customer-centricity and elevate purpose.

In large part because they already serve as society's "financial safety net," offering a safeguard against financial loss for many risks globally, insurers have the ability to accomplish much more good for society. But as the number of risks that seem financially unsupportable rises, more insurers are understanding they have a greater part to play in reducing risk, lessening the severity of losses, and eliminating gaps in life and non-life protection in international markets.

Adding more electronic bells and whistles won't likely be enough to bring about transformative change. Proactive insurers are also starting to adopt enterprise-wide cultural transformation in an effort to break down organizational silos, develop their workforce, and create a more pervasive customer-centric focus. Rethinking how skills are shared across business lines and geographies could be one way for global insurers to contribute to a more cohesive and integrated client experience.

Earning recognition as sound ethical and financial stewards of societal welfare could ultimately empower insurance companies and their distribution force to shift away from a Non-life insurance: Evolving to strengthen relationships and profitability transactional role to adopt a broader, more holistic, relationship-based approach to consumer interactions. This transformation should not only promote insurers’ growth prospects but could also fundamentally elevate the perception of the industry’s role in protecting and enriching the ever-evolving world.

Non-life insurance: Evolving to strengthen relationships and profitability.

For the third year in a row, non-life carriers are increasing premiums at higher than average rates across most lines of business, but increasing loss costs are preventing them from achieving profitability. The combination of higher inflation and more catastrophic events could lead to a shift in how the industry interacts with customers.

In 2022, the US industry reported a net loss of US$26,9 billion, which was the largest since 2011 and more than six times the amount reported in 2021. The increase in losses and associated loss adjustment expenses more than doubled compared to a decrease in earned premiums of 8.3%, resulting in a one-third decrease in net income of US$41,2 billion and a combined ratio of 102.7 percent, compared to 99.6 percent in 2021. The results for the first quarter of 2023 were even worse, with the US industry recording a consolidated loss of US$7,34 billion, the highest in 12 years.

Tech transformation: AI is opening new avenues to enhance and personalize the customer experience

As the operating environment continues to evolve, the need for insurers across sectors to leverage automation, artificial intelligence, advanced analytics and core transformation will only increase in the coming year.

These capabilities could be the building blocks for insurers to navigate the ever-changing landscape and redefine their mission.

In the coming year, advanced technology capabilities can help insurers achieve operational objectives such as:

improving underwriting for better pricing and risk selection

strengthening claims management to reduce loss costs

improving efficiency by simplifying operations

improving long-term objectives such as proactively assisting clients in mitigating or eliminating risks before they happen

enhancing customer relationships through personalized coverage and services

improving outreach to underserved segment.