While insurance continues to be one of the most disrupted sectors in the global economy and insurance CEOs are more concerned about the pace of technological change than CEOs in any other industry, more than 90% of insurance CEOs are confident about their own organisation’s revenue prospects over the next three years, according to PwC’s 21st Global CEO Survey.
The findings showed insurance CEOs share a generally positive outlook, but actual growth has typically failed to live up to expectations. Dubbed “The next big leap”, the report explained how insurance businesses can reinvigorate revenue growth while still driving down costs.
“Among the many reasons for the high confidence of CEOs in the insurance industry is that the anticipated disruption from incoming competitors like InsurTech and digital platform players has not materialised like the industry initially feared. Partnership, not rivalry, with new entrants is the order of the day,” said Mr Stephen O’Hearn, PwC’s Global Insurance Leader.
The grounds for this optimism also include the increasing digitisation of the global economy and the resulting shift in customer preferences. This opens up a range of new opportunities. For example, as more business moves over to digital channels, demand for cyber insurance is rising – 40% of CEOs from across all industries are now extremely concerned about cyber threats, compared to 24% in 2017.
Clear strategy and roadmap to get up to speed
The report said more insurance CEOs are concerned about the pace of technological change (85%) than leaders in almost any other industry. Technological advances are changing business and operating models, which is challenging to an industry that is accustomed to slow evolution rather than rapid transformation.
Getting up to speed demands a clear strategy and roadmap for decommissioning legacy systems, accelerating automation, and laying the platform for the next wave of transformation. Substantial opportunities are on the horizon as a new generation of predictive analytics and AI transforms insurers’ ability to detect, anticipate and avert risks. Notable possibilities include RegTech, which can not only strip out costs in labour-intensive areas such as “know your customer” requirements, but also strengthen risk management and improve the reliability of compliance.
Still a need for longer-term transformational change
There is the other side of the coin when it comes to the described optimism and opportunities, the report noted. Around 66% of insurance CEOs still report increasing pressure on their organisation to deliver business results under shorter timelines, and more insurance CEOs see changes in consumer behaviour as a threat to growth (78%) than almost any other sector.
So while perhaps having overestimated the impact of outside threats and short-term disruption, insurers should not be underestimating the need for longer-term transformational change into digitally-enabled, customer-focused organisations with flexible business and operating models.
Driving innovation requires a dialogue between human and machines in a “bionic” organisation. This is not about one dictating terms to the other, but humans communicating with AI and robotics to mutually improve outputs. Key to this transformation will be the success to attract digital talent but, at this point, only 19% of insurance CEOs say it is easy to do so.
It is not just digital skills that are in demand. Creativity and emotional intelligence are also needed to innovate and re-connect with customers, the report said, noting that 86% of insurance CEOs believe they need to strengthen soft skills in their organisation alongside digital skills. M