EY Insurance Outlook: what should insurers do to prepare for tomorrow?

Our insurance outlooks for 2019 confirm that technology and innovation are key to driving agile growth in a challenging environment. 

Update: Americas Outlook 2019 now includes country snapshots for Brazil, Canada and Mexico (pdf)

It is an exciting time in the insurance industry globally, as insurers are investing more than ever to transform their business models and seize subtly different growth opportunities around the world. Of course, macroeconomic challenges, demographic shifts and new competitive threats are big challenges – and part of what energizes industry leaders. 

That's why it’s an opportune time for insurance industry stakeholders to take stock, as the EY insurance team has done with our latest editions of our annual industry outlooks. The regional reports covering the Americas (pdf), Asia-Pacific (pdf) and Europe (pdf) are the result of several think tank sessions conducted with industry and functional professionals, as well as strategists and technologists. They cover the major trends, disruptions and innovations that are impacting the global insurance industry, and offer recommendations for how all types of insurers can navigate the challenges and seize the opportunity. 

Overall, the team found that global insurance sector growth is expected to remain weak, though there are many reasons for optimism. There is much more detail in the reports, but three “big ideas” point the way forward for insurers:

• Digital transformation is critical to optimize costs, boost innovation and drive agility.
• Both digital and direct distribution channels are imperative for growth, though traditional human channels are not going anywhere soon.
• Life insurers must expand their value propositions and product sets to address all aspects of financial wellness.

The entire EY insurance team is energized by the possibilities that exist for insurance – better ways of working, a clearer sense of purpose, more effective use of emerging technologies and ecosystems as well as our industry’s unique ability to promote financial wellness, provide protection and enable insurance customers to better manage risks.

The following are among the highlights of the report.

Asia-Pacific outlook

Home to nearly one-third of the world’s population, the Asia-Pacific region holds the key to the insurance industry’s future. Rising incomes and expanding populations have benefitted life insurers across the region. Non-life sectors have grown in line with GDP growth. Asia-Pacific markets in general and China in particular will also influence the future of insurance because they are hotbeds of innovation.

While growth will inevitably slow down, considerable opportunities remain, especially in those areas where the region’s insurers are aggressively experimenting and innovating.

European outlook

Persistent slow economic growth, especially when compared to the US and emerging markets, has constrained growth in the European insurance market. After a slightly more positive 2017, growth slowed down again in 2018, although at very different paces within individual markets across the continent. 

European life insurers must accelerate the evolution to digital, but evolve in ways that appeal to customers. They are very eager to move legacy products and customer interactions to digital platforms and channels.

Looking ahead, it's clear that insurers will continue and even accelerate their drive toward digital. Trust will be essential in that journey. Digital trust will be the bedrock of customer relationships and the value insurers provide. Life insurers, for instance, can't deliver a sense of financial wellness unless consumers trust them.

It's time for insurers to move beyond "thinking about digital" and start "thinking digital" and "acting digital." Insurers that can make that shift will have the agility to seize emerging opportunities and adapt to rising customer expectations. We believe insurers can succeed in making these fundamental and necessary changes, despite the many great challenges the industry faces. In other words, despite some potentially challenging growth figures in the Americas and EMEA in the short-term, we see cause for optimism in the long-term outlook for insurers.