Deloitte’s 2024 Global Insurance Outlook: Navigating the Future of Insurance
In an era where global risks are escalating and the insurance industry is pivoting towards a more customer-centric and digitally adept future, the “2024 Global Insurance Outlook” by Deloitte Center for Financial Services provides a comprehensive exploration into the multifaceted dynamics of the industry.
The research, accessible here, underscores the pivotal role of insurers in not only acting as society’s “financial safety nets” but also evolving into sustainability ambassadors, influencing purpose-driven decisions across various sectors.
GBV delves into the document and highlights important aspects which we feel will resonate with our readers…
Insurers as Catalysts for Societal Impact
The summary delineates the intensification of global risks, ranging from climate change to cyber crime, and the insurance industry’s capacity and readiness to act as society’s financial safeguards. The industry is not merely reacting to risks but is also undergoing transformation efforts aimed at preventing losses from occurring initially.
This shift towards a more customer-centric business model necessitates advanced technology adoption and a modification of company culture to minimize siloed interactions, enhance employee collaboration, and increase the accessibility of customer data.
Moreover, the industry is pivoting towards becoming a sustainability ambassador, propelling purpose-driven decisions and strategies across various sectors to create a better workplace, marketplace, and society.
Group Insurers: A Strategic Shift towards Digital and Connectivity
2024 Global Insurance Outlook also provides a thorough exploration into the evolution and anticipated trajectory of group insurers in the post-pandemic era.
As the impact of the pandemic begins to fade, the overall market growth rate for group insurers over the next few years is expected to align predominantly with the economy, employment, and wage trends. However, providers aspiring to grow beyond the overall market may face challenges in expanding product portfolios, including voluntary offerings that can potentially add premium and generate higher margins.
A notable statistic reveals that 45% of employees surveyed agree they are extremely likely or likely to participate in more voluntary benefits offered through their employer (e.g., critical illness, accident, disability, hospital indemnity, supplemental life, etc.) in 2023, up from 38% in November 2021.
Moreover, as awareness of long-term care costs grows, US employee benefit buying habits continue to be impacted by the pandemic, particularly regarding enrollment decisions for products such as life insurance and supplemental health products.
In 2022, new premiums for coverage for accident, critical illness, cancer care, and hospital indemnity surged by 12% to US$2.9 billion year over year. Conversely, new workplace life insurance premiums fell 1% from 2021 to US$3.9 billion, although this is likely because it was compared to the 14% increase in 2021, which was one of the largest gains in 30 years.
Group insurers are also exploring innovative ways to enhance client experiences on digital portals while enabling self-service capabilities. As the race to ubiquitous digitization continues, HR organizations are turning financial products into a force for good by inspiring people to improve their mental, physical, and financial well-being in a holistic and engaging way.
Embracing Digital Transformation
The report delves into the potential of technology, especially digital tools and advanced analytics, to empower life insurers and their agents to transition from a transactional role to broader, relationship-based consumer interactions.
Modernizing systems can potentially facilitate the use of alternative data sources for faster application underwriting and processing, more seamless cross-selling, and customer personalization and ease of engagement, as well as rapid new-product launches.
It could also enable better connectivity and collaboration with industry and non industry partners across the value chain, both to enhance customer experience and drive more sources of profitable growth. Collaborations could include services for lead generation, as well as ancillary products to provide holistic coverage (wellness, wealth, health, etc.) capabilities.
Human Capital: A Catalyst for Workforce Transformation
2024 Global Insurance Outlook also looks into the profound realization among carriers that the way talent is accessed, engaged, and developed should be based on future organizational goals rather than traditional practices.
The siloed architecture that permeates throughout the industry, including infrastructure and workers, should be transformed to break bottlenecks and increase the speed and agility associated with customer-centric models.
This means that business units and functions such as underwriting, portfolio investment, and claims management may no longer act independently, but instead adopt a skills-based approach enabled by the shift from employee-based models to workforce ecosystems.
This involves understanding employee competencies by role, function, and level, notwithstanding where they reside in the company, and leveraging them across business lines and functions, potentially breaking down silos and driving more impactful collaboration.
Technological Modernization: Enhancing Employee and Customer Experiences
Moreover, the adoption of new technology may not only transform the industry’s appeal from “antiquated” to cutting-edge but may also provide employees with increased opportunities to focus on more meaningful, purposeful, higher-value work.
It is estimated that AI and machine learning will increase labor productivity about 37% by 2025 by eliminating or minimizing more manual tasks and freeing up current workers to add more value. This will likely require reskilling and upskilling, which should appeal not just to the current workforce, but also job candidates looking for a career they can grow in.
Furthermore, technologies such as generative AI can provide nudges to the client-facing workforce to portray greater empathy or signal potential customer attrition/coverage lapse before it happens, which could boost goodwill and stronger relationships between the workforce and the client base.
Elevating Industry Appeal through Sustainability and Technology
Several dynamics are unfolding both within and outside the industry that may generate greater appeal to more tech-savvy job candidates. Insurers seem to be recognizing that rapidly evolving dynamics impacting the industry could require workforce transformation.
Recognizing the impact on the workforce that may ensue from long-term growth strategies, many insurers are elevating the role of the chief strategy officers to work in conjunction with the chief human resource officer and other talent leaders. This could help ensure that shifts in the long-term strategic vision can be embedded in change management messages and are in sync with the employee value proposition.
Moreover, as insurers ramp up their technology architecture, many are looking to elevate the depth and breadth of technology skills in their workforce. This can augment skills requirements for underwriting, actuarial science, and predictive modeling positions, further intensifying competition both within and outside the industry.
Conclusion and Future Outlook
2024 Global Insurance Outlook provides a rich exploration into the multifaceted dynamics of the insurance industry, spotlighting the transformations, challenges, and opportunities that lie ahead.
The industry is not only navigating through the complexities of escalating global risks but is also steering towards a future that demands a more customer-centric, digitally adept, and sustainability-focused approach.
The research illuminate the pathways through which insurers are navigating digital capabilities and connectivity to enhance offerings and customer experiences.