By David Honour, Head of Insurance Consulting at XPS group
We work closely with insurers to help them meet these challenges head-on. There are five key questions that every insurance C-suite should be prepared to answer:
1. Are your products and services truly consumer-centric?
The implementation of the Consumer Duty represented a fundamental shift in regulatory expectations. No longer is it enough for insurers to demonstrate compliance, the focus is now on proving that products deliver good outcomes for customers. The challenge is pronounced for legacy products. Insurers must rethink their approach to pricing, product design, and customer engagement, ensuring that transparency and value for money are embedded into every offering. Those who successfully implement Consumer Duty will not only mitigate regulatory risk but also enhance trust and loyalty in an increasingly competitive marketplace. The insurance C-suite needs to invest more in leveraging data and advanced analytics to help understand customer needs and behavior, to ensure products are kept simple and truly focus on customer outcomes while being profitable.
2. Are you investing in the right technologies to drive transformation?
Digital transformation is no longer optional; it’s a strategic imperative. Advanced analytics, AI, and cloud-based platforms are redefining how insurers interact with customers, assess risk, and streamline operations. InsurTech solutions are rapidly enhancing customer engagement through gamification and real-time data-driven personalisation. However, many insurers still grapple with legacy systems that hinder progress. The successful firms will be those that invest in seamless digital ecosystems, enabling them to respond dynamically to market shifts.
Too often we have seen insurers’ attempts at digital transformation fail. It is vital that insurers deliver effective and strengthen the assessments of the business case for change, establish measurable KPIs that enable effective monitoring, and put in place strong governance and oversight tied to executive sponsorship.
3. How resilient is your balance sheet in the face of increased scrutiny?
The PRA is intensifying its focus on insurers’ liquidity and risk management practices. The 2025 Life Insurance Stress Test (LIST) results, new liquidity reporting requirements, and the PRA’s solvent exit planning framework are all set to reshape capital strategies. Insurers must be proactive in ensuring robust stress testing, scenario planning, and capital optimisation. Transparency is also key—investors and regulators expect clear communication on financial resilience. The firms that thrive will be those that take a forward-looking approach to risk management rather than reacting to regulatory pressures.
4. Are you well-positioned to capitalise on opportunities in the BPA market?
The BPA market remains one of the most dynamic segments in UK insurance, with over £50bn expected to be transacted in the UK alone this year. New entrants, evolving pension trustee expectations, and the recent signals by the government for the potential to allow pension schemes to extract surplus will drive new strategies and increased competition across the market. I think that innovation is key here—insurers that differentiate themselves through flexible structures, operational efficiency, and enhanced member experiences will be best placed for success. The growing demand for deferred premium BPAs highlights the need for tailored solutions that require careful actuarial and investment planning. So, if you’re an insurance executive, and your BPA strategy is not shifting to consider these additional factors and market pressures outside of pricing alone, I would argue that it is time to reassess.
5. Are you aligning with ESG and the productive finance agenda?
ESG factors are no longer just a compliance issue - they are a business imperative. The UK Green Taxonomy and Transition Plan Taskforce guidelines are shaping investment strategies, while insurers are expected to play a key role in funding sustainable infrastructure and productive finance initiatives. Firms must also navigate the balance between regulatory requirements and achieving strong investment returns. For example, the Solvency II reforms provide opportunities for insurers to explore new asset classes, but this requires careful due diligence and risk assessment. Again, are you prepared to answer the question of how you are embedding ESG into your core strategy to drive long-term value creation?
My final thoughts
The insurance industry continues to evolve rapidly. The firms that will thrive are those that tackle these pressing questions with strategic clarity. Insurers must navigate regulatory changes, technological transformation, capital resilience, competitive pressures, and ESG imperatives - all while maintaining a relentless focus on customer outcomes. We are committed to supporting our clients in addressing these challenges, ensuring they are well-positioned to seize opportunities and drive sustainable growth. By proactively answering these five key questions, insurance leaders can move beyond compliance and resilience - to innovation and leadership in the evolving market landscape.
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