BY Richard Summerfield
The insurance industry is changing at an unprecedented level according to a new report from PwC. 'Insurance 2020 and Beyond: Necessity is the mother of reinvention' reviews developments in the industry set against PwC’s initial projections, and is based on interviews with more than 80 chief executives officers around the world.
The insurance space is at an important crossroads. Going forward, the industry will need to deal with significant changes to customer behaviour and acclimatise to technological advancements and new distribution and business models. More stringent local, regional and global regulatory developments will also contribute to the changing nature of the industry between now and 2020.
The report, which took five years to produce, notes that digital developments in particular have had a significant impact on the insurance space – an impact that is likely to grow over the next five years. Digital developments have helped insurers to enhance their customer profiling, develop sales leads, tailor their financial solutions to individual needs and, for non-life businesses, improve claims assessment and settlement.
Many of the firms surveyed said they have taken steps to improve their digital distribution channels. They have initiated new programs to help integrate their product lines into a client’s life, with pay-as-you-drive applications for smartphones just one example of such integration.
Going forward companies will be required to utilise ever more sophisticated sensors, big data analytics and communicating networks as the much lauded ‘Internet of Things’ becomes more commonplace. Jamie Yoder, PwC Global Insurance Advisory Leader, notes, “The emerging game changer is the change in analytics, from descriptive (what happened) and diagnostic (why it happened) analysis to predictive (what is likely to happen) and prescriptive (determining and ensuring the right outcome).”