The re/insurance industry is at a pivotal juncture as it deals with changing customer behaviour, new technologies and new distribution and business models.
This is the finding of PwC in its latest report ‘Insurance 2020 and Beyond: Necessity is the mother of reinvention’.
According to PwC, the pace of change in the re/insurance industry is occurring more rapidly than could have been envisaged and businesses need to look at how to keep pace with the “sweeping social, technological, environmental, economic and political (STEEP) developments ahead”.
“The changing market will require considerable product and business model redesign. This won’t be easy, but it’s the new reality,” said Arthur Wightman, PwC Bermuda territory leader and insurance leader.
“The implications of these trends are altering the way insurers compete. For example, moves to mitigate traditionally un- or under-insured catastrophe risks and control losses are increasing.”
Additionally, 56 percent of insurance chief executive officers see new market entrants as a threat to their growth prospects, more than in any other financial services sector.
“What comes through strongly is the need for reinvention rather than just adjustment if insurers want to sustain revenues and competitive relevance,” said the report. “As a result, many insurers will look very different by 2020 and certainly by 2025.”
PwC added that with the stream of new entrants into the market and new business models, insurers must not only scan for developments within insurance, but also “maintain a clear view of the challenges and opportunities coming from outside the industry”.
PwC, Bermuda, Arthur Wightman, Reinsurance