At this time last year, the world seemed a gloomy place. Climate change, volatile politics, trade wars, and relentless cyberattacks were threatening many firms, including insurers. In our predictions for 2019, we noted the caution with which insurance carriers were approaching their plans for the year, with a clear focus on back-office processes such as compliance monitoring, regulatory reporting, or claims processing.
Well, the wider political, economic, and environmental outlook hasn’t changed much in the past year. What has changed is the response of the insurance industry and insurers to the continuation of these broad-reaching trends. Rather than focus on incremental improvements, insurers are trying to get ahead of the rise of value-driven consumers. In 2020, we expect that insurers will do three things:
- Stake their brands on sustainability. Insurers such as AIA are taking a broad approach to sustainability, focusing their efforts on employee well-being, inclusive recruitment, talent development and retention, diversity policies, effective governance, ethical business practices, and climate change. And they will publicize these efforts to court value-driven consumers. For example, Allianz and Generali have recently started promoting their position or even just inclusion in the Dow Jones Sustainability Index, which has been around since 1999.
- Invest in new connected health and home products. Insurers’ enthusiastic uptake of usage-based car insurance hasn’t translated into improved combined operating ratio or profitability. But it has enabled insurers to engage customers in a conversation that focuses on incident prevention rather than payout. Now the growing adoption of sensors, smart home products, smart speakers, and the emergence of smart home data aggregators are driving insurers to explore new home insurance and health insurance products and services. The aim? Deliver better outcomes for customers by promoting healthy and safe behaviors and managing chronic conditions…
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