Deloitte recently published its “2024 Global Insurance Outlook” and in it were some expected changes for the year ahead. Highlighted as the most significant projections were:
- The intensified focus on the insurance industry’s capacity and readiness to react as society’s financial safety net in view of the escalating frequency of risks that include climate change and cybercrime;
- The insurance industry’s undertaking of transformative measures aimed at preventing losses after realizing insurers may not be as effective as they need to be in reacting to heightened risks;
- The industry’s move toward a more customer-centric business model which will require more advanced technologies and a change in corporate culture;
- A possible upsurge in mergers and acquisitions which had been on the decline; and
- Adoption of the industry’s role as sustainability ambassador to influence clients and drive decisions and strategies that help create a better workplace, marketplace, and society.
For insurers and the organizations and individuals they serve, it is important to understand what the ramification of these projections will mean for them in 2024. With regard to realizing greater customer-centricity, lower risk and greater opportunities, a key element will be the further adoption of digital technologies.
Developing Digital Capabilities
Both to support a more customer-centric approach and a more proactive stance against certain risks (e.g., cybercrimes), insurers are moving toward digital transformation. For group insurers who want to position themselves for maximum sales of voluntary benefits, which were made even more popular by the pandemic, this is particularly important.
Deloitte found that 45% of employees surveyed agreed that they are extremely likely to participate in more voluntary benefits offered through their employers in 2023, up from 38% in November 2021. Insurers will be looking to improve their clients’ employees’ experience by increasing their use of digital portals and apps for self-service capabilities. By deploying an application programming interface (API), a direct connection can be made from the insurer’s system to the client/employer’s benefits administration platform thus eliminating the need to download data and send information back and forth between the insurer and client. In the end, digital capabilities also help increase productivity and reduce operational costs.
Artificial Intelligence
With Artificial Intelligence (AI) top of mind for insurers, they are expected to look to better leverage this technology in 2024. AI enables insurers to personalize information for an enhanced customer experience. It also supports more informed decision-making by enabling the real-time capture of relevant data and insights. In addition, it facilitates increased employee productivity and cost savings.
Regarding risk mitigation, AI has proven to thwart cybercriminals and support related cybersecurity regulatory compliance by helping to manage sanctions issued by the Office of Foreign Assets Control (OFAC), U.S. Department of Treasury, and Financial Industry Regulatory Authority (FINRA), among others. It also plays an important role in identifying suspicious activity, achieving optimum screening results, and reducing false positives in financial transactions.
For insurers, 2024 offers opportunities to shore up internal processes, leverage technologies and adopt a corporate culture and best practices which reflect a strong customer-centric approach.
