With global macroeconomic forecasts for 2024 indicating both slowing GDP growth and continuing inflationary pressure, the road ahead might be a rocky one for the insurance industry – that is if insurers are not prepared for what might be coming.
But what can the industry expect in the new year?
Kenneth Saldanha, Senior Managing Director – Global Insurance Lead at Accenture says top-line revenues for property and casualty (P&C) insurance carriers move with GDP. In line with this Swiss Re Sigma predicts that revenue growth for P&C carriers is expected to slow to 2.6% on average for 2024 and 2025 – down from 3.4% in 2023.
On the flip side, says Saldanha, the life insurance segment is seeing stronger demand for savings and retirement products.
“In emerging markets, revenue growth is expected to reach 5.1% on average in 2024 and 2025. This revenue growth may soften the impact of the ongoing profitability and liquidity challenges the segment faces,” he says.
Saldanha adds that claims volumes and costs across lines of business remain elevated in most major markets.
“While some of this is inflation-driven and cyclical, systemic risks such as social inflation, increasing NatCat (natural disaster) claims and demographic shifts in aging, health and mental health are here to stay,” he says.
Here are some of the global insurance trends that experts predict will take centre stage in 2024.
Response to global risk
It is no secret that escalating global risks – from climate change to cybercrime – are challenging the insurance industry’s capacity and readiness to react as society’s “financial safety net”.
Read: Shifting risk landscape to impact cost of reinsurance even further
Deloitte’s Insurance Outlook 2024 reveals an increasing awareness among insurers, prompting actions to prevent risks, reduce loss severity, and bridge protection gaps.
In 2024, insurance companies are going to be faced with finding innovative solutions and risk models to address the challenges posed by extreme weather events, natural disasters, and other climate-related risks.
“Even while the most extreme events may appear unavoidable, insurance combined with proactive risk management can still help minimise the degree of their impact on affected individuals and communities,” says Deloitte.
Arthur Calipo, Deloitte Asia Pacific Insurance Sector leader, anticipates significant industry transformation in 2024, emphasising the role of insurers in distributing risk to enhance societal well-being.
Deloitte predicts priorities for insurers in the upcoming years will include Insurtech, green insurance, inclusive insurance, and digital insurance.
With the cybersecurity market expected to top USD 314.28 billion by 2028, and cyber insurance being one of the quickest-growing lines of insurance coverage in the market today, there’s massive potential for growth in this market come 2024.
Read: Cyber insurance: ‘brokers have their work cut out for them’
Innovation and stronger client relationships
According to Joanna Wong, Deloitte China Insurance Sector leader, the insurance industry in China, for example, is undergoing a multidimensional transformation to achieve “customer centricity” and provide comprehensive risk protection and solutions to individual and corporate customers, from products and services, channel marketing, operation model, and digital capabilities to ecosystem plays.
Calipo adds: “More insurers in Asia Pacific are already investing in technology platforms and ecosystem partners to improve their customer experience by offering simplified customer journeys or low-cost, customisable products across life, health and wealth.”
Deloitte predicts that this shift to a more customer-centric business model will likely require advanced technology adoption and modification of company culture to help minimise siloed interactions, enhance collaboration among employees, and increase accessibility of customer data – “but skill sets might need to be augmented”.
AI and advanced analytics
In 2024, there’s going to be a continued emphasis on digital transformation with a focus on automating processes, enhancing customer experience and improving operational efficiency.
YuLife shares they can already see the impact of AI and data analytics in improving business outcomes.
“In fact, with a recent survey we conducted with HR Ninjas, we learned that 73% of HR professionals are looking to become more data-driven in the new year when it comes to their employee benefits and insurance offerings. This way, they can analyse the effectiveness of programmes and insurance products and make a true case for employee wellbeing in the workplace.”
From a product perspective, the customer-centric approach also means the rise of more personalised plans. Especially with the use of Advanced Analytics and AI in underwriting and risk assessment, companies will be able to offer more individualised offerings — and cater the product to the customer more than ever before.
“For insurers, this means if they want to establish themselves in workplaces in 2024, building automated dashboards, analytics tools and data-driven tools are going to be vital product additions. Not only this, but the rise of mobile insurance apps and the ability to conveniently file claims online and access everything in one place is going to become the norm,” says YuLife.
Accenture predicts a shift from excitement about generative AI to a demand for tangible economic impact in 2024. Saldanha says insurers with prior investments in data, analytics, and AI are expected to incorporate more generative AI while focusing on responsible and ethical usage risk controls.
Human capital strategies
According to Accenture, AI/GenAI has proliferated to decision support, processes and interactions across the insurance value chain. Saldanha says this comes at a time when the industry is under pressure to address looming workforce gaps in both Underwriting and Claims.
“In 2024, we will see AI/generative AI treated more as supplementary talent. Insurers will also test sourcing models for “complex” work that was closely held and traditionally developed.”
He adds making these changes a reality will require the industry to migrate away from traditional talent development through apprenticeship and standard practices of knowledge management.
That being said, YuLife predicts a hiring increase.
“Across various insurance companies, there have been large layoffs over the years. But in 2024, insurers have lofty goals to hire more and grow revenue.”
Almost 50% of people surveyed in a Labor Market Study indicated that their plan to meet rising business demands is through hiring. While only 10% of insurers indicated potential cuts and layoffs, the other respondents hinted at the complete opposite:
- 63% of carriers want to increase hiring;
- 65% of property/casualty insurers aim to grow staff;
- 56% of life and health insurers want to expand their team;
- while just 27% plan on maintaining their current staff numbers.
Risk portfolio shifts and capital reallocation
While industry convergence isn’t a new phenomenon, Accenture states that more industry players are looking over the fence for greener pastures in P&C, health and wealth management.
“Automakers want to offer P&C insurance,” says Saldanha.
P&C carriers, on the other hand, are getting into health products and services, and health insurers are offering voluntary and supplemental benefits.
Saldanha says for many insurers, the greenest pasture is in the retirement space.
“Millennials and Gen Z will become the beneficiaries of the greatest wealth transfer in history the next two decades. Their values-driven approach to investing will disrupt retirement and create new opportunities for Life/Annuities carriers who offer a value proposition in alignment with their values,” he says.
New and improved wellbeing programmes
Looking ahead, YuLife predicts a greater focus on prevention.
According to the tech-driven financial services provider, in 2024, insurance companies are likely going to have to start shifting their approach to one that supports health and wellbeing, as these topics are becoming top-of-mind for employees and workplaces across the globe.
“Not only this but the expectations and responsibilities of corporations to become a force for good are also rising faster than ever.”
Read: Game on: revolutionising insurance with a fun and well-being focused approach
Deloitte says, “One trend – likely exacerbated by the pandemic and the “great resignation” –is increased consumer demand for employee benefits focused on financial health and well-being.”
YuLife, for example, has built their insurance product around prevention tools that also offer a safety net in case of a crisis.
“And this concept of employers being responsible for the health and wellbeing of their team is more and more prevalent.”
Download the Deloitte Center for Financial Services’s 2024 global insurance outlook here.
