59% of insurance company CEOs believe there are more business opportunities than there were three years ago, however, 61% see more threats. The results of PwC’s 18th Annual Global CEO Survey, which includes responses from 80 CEOs in the insurance sector across 37 countries, reflect the heightened environment of change within insurance compared to other industries.
Jonathan Howe, PwC’s UK insurance leader, said:
“The fact people are living longer and have more wealth to protect presents insurers with an opportunity. However, with Solvency II now less than a year from going live and other regional and local changes coming up over the horizon, the challenge for the UK industry is how to minimise the upheaval and build the FCA’s conduct risk agenda requirements into a reliable and cost-efficient business.”
90% of insurance CEOs say they recognise how digital technology can help them sharpen data analytics, strengthen operational efficiency (88%) and enhance customer experience (81%), but 70% - more than for all but one other industry - see the speed of technological change as a threat to their growth prospects.
Nearly half of CEOs operating in insurance say they plan to enter into a new joint venture or strategic alliance over the course of the next 12 months. The need for the insurance industry to engage with new customers means two-thirds of CEOs see these tie-ups as an opportunity to do this. More than 30% see alliances as an opportunity to strengthen innovation and gain access to new and emerging technologies. Yet, only 10% are looking to partner with start-ups, even though such alliances could provide valuable access to the new ideas and technologies they need.
“Most insurers are still primarily focused on e-commerce – doing what they already do just via a different channel. Challenges include increasing commoditisation and the need to have lower cost digital distribution and advanced digital profiling to respond more effectively to customer demands. The winners will be those using digital to engage more closely with customers, fine-tune underwriting and develop customised risk and financial solutions as well as those who develop the advanced customer data analytics programmes already established in other sectors. Real-time risk monitoring, proactive risk prevention and lowering the cost of life and pensions options for younger and less wealthy customers will also be key to success.”
Talent diversity is now recognised as a key way to enhance business performance, innovation and customer satisfaction. Nearly three-quarters have, or plan to adopt a strategy, to promote talent, diversity and inclusiveness and 71% of insurance CEOs see the limited availability of key skills as a threat to growth.
“The transformation of the insurance marketplace is accelerating, creating opportunities for some and threats for others.
“Slow adaptation is not a viable option in the face of relentless disruption and change. Insurers need to be more radical in challenging and changing business models and move quicker in developing necessary competitive capabilities if they want to sustain growth and keep pace with market expectations.”
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