Entering into 2024, the insurance industry must navigate evolving technology, sustainability concerns and inflation.
Life Insurance International spoke to Ben Carey-Evans, senior analyst at parent company GlobalData, for an insight into what awaits the industry in the new year ahead of the Insurance Predictions 2024 webinar, touching on environmental, social and governance (ESG) issues, artificial intelligence (AI) and the current leaders of the industry.
Go deeper with GlobalData
Who are the leaders in the insurance industry heading into 2024?
Based on what we believe to be the key themes in 2024 (Inflation, AI, and ESG), Swiss Re, AXA, Munich Re and Ping AN are best placed to lead the insurance industry over the coming years. These are all giant insurers who are the biggest insurers and reinsurers in the world in terms of premiums. They also excel in terms of their usage of AI at an early stage in the insurance industry and their positions on ESG. Both themes will be essential to the fortunes of insurers for the next decade and these insurers and reinsurers are most active within them
Which companies may challenge the leaders in 2024 and why?
The leading global insurers are so entrenched in the industry and have so much financial power it is very difficult to challenge them, especially for a newer insurance company or insurtech. However, start-ups such as Lemonade and Zego are both very strong within AI and inflation. Both offer customers modern, digital, and flexible insurance policies which should appeal to consumers and businesses given the current climate.
How might AI affect the insurance industry in 2024?
AI within the insurance industry is still at a nascent stage. It is predominantly being used to upgrade chatbots and customer interaction at present. More ambitious use cases, such as predictive underwriting and risk profiling, and claims resolutions are more long-term and are being trialled by insurers.
How have insurance firms responded to inflation and how could it affect them in 2024?
It has been very difficult for insurers to respond. The obvious solution is to make premiums cheaper to retain and attract customers. But this is almost impossible for insurers, who have faced inflationary pressures themselves in terms of running costs as businesses, but also in claims inflation as repair work and materials have got considerably more expensive. Therefore, insurers have had to increase premiums too, and in some lines, such as motor, by significant percentages. This is incredibly likely to lead to losing some customers in 2024 as consumer budgets are tightened. Insurers should look to offer help where they can or be flexible in terms of allowing for monthly payments (over a large one-off annual one). They could look into usage-based insurance, where customers pay per mile in motor insurance, for example, so can limit the cost if they need to.
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By GlobalDataIs ESG a primary concern for insurance firms heading into 2024?
Yes, ESG is definitely a leading concern. Insurers face a great deal of pressure to be more active within ESG, especially on the environmental side. Insurers face pressure on multiple fronts, as they generally pick up the cost of increasing severe weather events across the world, with incidents like storms in the USA and forest fires in Australia being incredibly expensive. They also face pressure from the public on their ties with polluting industries, such as oil and gas. So, insurers need to find a way to move away from those high-value contracts and not see their bottom line suffer.
The Insurance Predictions 2024 webinar on 13 December will explore the key themes in the industry in 2024, including AI, ESG and Inflation.
