Insurance industry CEOs putting faith in technology, emerging marketsReprints
Insurance industry CEOs are investing in technology and looking to emerging markets to spur growth, a report released Tuesday by PricewaterhouseCoopers L.L.P. finds.
The report, “Coming to Grips With Market Transformation,” is based on a survey of 92 insurance CEOs in 39 countries and said leaders in the insurance industry need to remain cognizant of the near- and long-term challenges facing the industry.
“While many insurance CEOs have fixed their sights on the immediate challenges of low interest rates, slowing demand in mature markets, and the resulting pressure on share values, they can't afford to ignore the transformational changes on the horizon,” the report states.
PwC said the speed of change is putting existing business models at risk, noting that the developments in predictive modeling are revolutionizing risk analysis and may herald a paradigm shift in insurance from an industry that is predicated on the reactive payment of claims to one that acts as a preventative risk manager for insureds.
“Previous analytical advances have already allowed insurers to move from hindsight to insight and hence improve their understanding of profitability drivers and segmentation,” the report states. “The next wave of big data and predictive modeling will allow insurers to move from insight to foresight, where they can tailor interactions and pricing at a customer level and use real-time data for decision-making.”
This increased emphasis on technology was reflected in the survey, where 86% of CEOs queried said they plan to increase investment in technology over the next 12 months.
Another strategic goal the leaders indentified was shifting underwriting resources to manage the less familiar and rapidly evolving growth markets.
“With growth slowing in mature markets, many CEOs see greater potential in the still largely underpenetrated emerging markets of South America, Asia, Africa and the Middle East,” the report states.