Businesses around the world scrambled over the past couple of years to find their footing. Many trimmed resources (i.e. staffing) to stay afloat. Others cut other expenses. On the whole, very few businesses, let alone full industries, would look back and applaud the results of the pandemic-induced tumultuous time.
Still, despite the global financial challenges faced by many organizations across numerous industries during the pandemic, the global insurance market is expected to exceed USD 7 trillion in premium terms for the first time by the middle of this year. (1) This forecast comes on the heels of the fourth-highest rate of global insured catastrophe losses, which were over $100bn in 2021 (2) following a 3-year period that saw cyber-related claims increase from just under 500 in 2018 to more than 1,100 in 2020. (3)
With claims growing and losses deepening, it’s a wonder how and where the record-setting forecast will be accomplished. We can likely turn to investments and innovations made by the sector that aim to root out inefficiencies, cut costs, and perhaps even turn the trends around on the claims and losses.
This notion is certainly supported by new highs in insurance technology investments seen in 2021, where investments in digital capabilities continue to grow in claims management, data analytics, and automation to help make better, faster decisions while streamlining business processes. (4) It’s more than just claims and decision-making automation; the entire insurance value chain is getting a digital overhaul: (5)
- Product development
Flipping things on its side away from the functional business view to one depicting the operations and technical capabilities, we see that most organizations (69%) define their digital transformation as a method for gaining operational efficiencies: taking existing business processes and seeking to improve or expand them with the use of technology. (6) These are the top 5 strategic technologies connected to the organizations’ digital transformation initiatives: (7)
- Cybersecurity (47%)
- Cloud Computing (45%)
- Artificial Intelligence (43%)
- Data Analytics (33%)
- Automation (26%)
Technology investments can provide the base on which insurance firms can grow in the years to come, but it can only succeed if the human element is available to control the keyboards. It’s a recipe for success, but obtaining all of the necessary ingredients could prove challenging.
1 – “Turbulence after lift-off: global economic and insurance market outlook 2022/23,” Swiss Re Institute, October 2021
2, 3 – “Allianz Risk Barometer 2022,” Allianz Global Corporate & Specialty, January 2022
4 – “U.S. Property-Casualty Insurance Trends and Outlook for 2022,” AON, January 2022
5 – “Regulatory Considerations for Digital Insurance Business Models,” The Geneva Association, March 2021
6, 7 – “2021/2022 Digital Transformation & Cloud Survey: A Wave of Change,” Baker McKenzie, December 2021