The world's methods of conducting business have changed. Business industries and sectors inevitably follow suit. They have adjusted the manner in which they operate. We have recently shared with our members the current global perspective of our industry, as per the sentiments of the International Insurance Society (IIS).
In their 2021 Global Priorities Survey Report, IIS has articulated the priority areas which the industry must focus on, to effectively adopt to the fast-paced change that is taking place. Top of their list is the innovation of technology and the issue of cyber security. Issues of climate change, pandemic recovery, competition for talent, and data security were also featured in the report. The survey in question attracted responses from 9 776 active insurance executives.
These insurance executives claim that the following elements will have a positive impact on the growth prospects of the insurance services sector:
- Recovering from the Covid-19 pandemic,
- Minimizing the threat of climate change,
- Thriving amid rising social and political instability, and
- Keeping up with technological advancements.
For example, they argue that climate change has a clear effect on the industry's bottom line. It brings with it a "frequency of natural disasters". In the past years the world has been experiencing a series of natural disasters, across various countries. These changes prompt change in the industry. The ramifications of these changes are evident in many components of the business spectrum.
Change in Customer Expectation
Customers need to move with times. Their demands are determined by the prevailing circumstances. This truth has been displayed during the COVID-19 pandemic. While industries are scrambling to make sense of the world as it is currently, the true drivers of change are the consumers whose needs they are trying to meet. One executive highlighted the big challenge the industry faces – correcting and demystifying myths the general public holds about insurance. Insurance is not intended to cure all ills, yet it is often expected to.
This factor brings us to a point where we can safely and readily conclude that our customers' needs have changed, and so has their behaviour. There is a clear shift in areas where they need insurance protection the most. As the industry is getting its head around the shift, the onus still lies on the industry to educate customers about the limitations service providers get confronted with.A glaring behavioural change that results from the pandemic, is the way in which we used and continue to use technology.
Technology and Cyber
Alterations in the use of technology have changed the ball game completely, both from the service provider's point of view as well as that of customers. Executives who took part in the IIS survey are concerned that they may be an injection of new competition against the industry. The competition will be the data and virtual consumer orientated companies.
Technology is not only paving the way for new entrants that have a potential of disrupting the industry; it is also opening the door to cybercrime. Three-quarters of executives said that cyber security was among the top three political and legal threats that their company was focused on addressing in 2021. Legacy systems are the point at hand. The industry is generally slow to update complex, absolute databases hosting customer information. This leaves the data stored in them vulnerable to hackers.
Talent
The IIS report revealed concerns by executives on the increase of retirements and the struggle to recruit new talent. Surveyed executives described the industry as one with stagnant leadership and an entrenched business model unable to quickly adapt to the digital world. This has resulted in 'stunted innovation,' 'difficulty retaining talent,' and 'an inability to connect with millennial and Gen Z customers.'
With these and other industry perspectives outlined in the IIS report, it would be wise to heed the warnings and urgently act to mitigate these challenges, before they blossom into overpowering problems. We need to have frank discussions on our customer relations, technology prowess, skills set and talent acquisition and retainment efforts. If the industry is to survive the adverse effects of the pandemic and emerge the victor, appropriate viable turnaround strategies have to be embarked on. This will assist in counteracting current and future needs of customers.,
Access the full IIS report here.