德勤全球-2019_Insurance_Industry_Outlook_40页_4mb

2019 Insurance Outlook Summary

Core Content Overview

The 2019 Insurance Outlook provides a comprehensive analysis of the insurance industry's performance in 2018 and its outlook for 2019. It highlights key trends across technology, talent, product development, mergers and acquisitions, and regulatory changes. The report emphasizes the need for insurers to adapt to a rapidly evolving economic and technological landscape to maintain competitiveness and growth.

Main Points

1. Insurance Industry Performance in 2018

• Positive Factors: Sustained economic growth, rising interest rates, and higher investment income supported insurer results in 2018.
• US P&C Sector: Achieved strong growth, with net premiums written increasing by 12.7% in the first half of 2018. Underwriting results improved dramatically, with a 300% turnaround from a $3.7B loss to a $6.7B gain. Net investment income rose 12.2%, and net income more than doubled to over $34B.
• Global P&C Sector: Advanced markets saw modest premium growth of 1.9%, while developing markets experienced a slower rate of 6.1% compared to 9.8% in 2016.
• US Life and Annuity (L&A) Sector: Struggled in 2018 with virtually no premium growth, but annuity sales are expected to rise between 5 and 10% in 2018, with another 5% growth in 2019.
• Reinsurers: Benefited from the improved P&C results, with net premiums up by one-third and a combined ratio of 96.1.

2. Technology Trends

• Cloud Adoption: Cloud computing is now a critical part of the insurance technology environment. Over 70% of insurers use cloud services.
• Drivers of Cloud Growth: Cost savings, scalability, and flexibility are key factors. Cloud enables faster deployment and better data analytics.
• Cloud Strategy: Insurers should adopt a multiyear cloud strategy, including phased migration of legacy systems. Cloud-native solutions and AI integration are expected to gain traction.
• Cybersecurity Concerns: Insurers must maintain responsibility for security policies, even as they rely on cloud providers for infrastructure.

3. The Future of Work

• Talent Challenges: The labor market is tight, with a general unemployment rate of 3.7% and an insurance industry rate of 1.7%. Insurers face difficulty in hiring tech, data science, and actuarial talent.
• Automation Impact: Robotic process automation and AI are changing job roles, requiring retraining and repurposing of staff.
• Flexible Workforce: Insurers need to embrace a more flexible and virtual workforce, including part-time workers, freelancers, and contractors.
• Leadership and Culture: Developing leaders who can guide a digital transformation and rethinking job roles and training are essential for long-term success.

4. Product Development Trends

• Demand for Flexibility: Consumers want more personalized and flexible insurance products, especially in the sharing and gig economies.
• IoT and InsurTech: IoT and InsurTech are enabling new forms of coverage, such as on-demand insurance for single items. Examples include Trov and Bought by Many.
• Challenges: Implementation costs, consumer demand, and compliance issues (particularly around privacy) are major barriers to IoT adoption.
• Hybrid and New Products: There is a growing demand for hybrid policies that combine different coverage types and for entirely new product lines.

5. Mergers and Acquisitions (M&A) Trends

• Mixed Signals: Large M&A deals in 2018 (e.g., AIG and AXA acquisitions) were followed by a slowdown, but the industry may see an uptick in 2019.
• Market Pressures: Insurers are under pressure to achieve sustainable growth, and the availability of capital and improving interest rates may support M&A activity.
• Debt Costs: Rising interest rates could increase the cost of debt, potentially limiting M&A activity.
• Deal Value: The aggregate deal value for M&A in the first half of 2018 rose by 162% compared to the same period in 2017, with the average deal value increasing significantly across sectors.

6. Regulatory Trends

• Focus Shift: Regulatory focus is broadening from solvency to market conduct, emphasizing fair practices and transparency.
• Cyber Risk and Privacy: Regulations are expanding globally, especially in the area of cybersecurity and data privacy, placing more responsibility on insurers to manage these risks.

7. Tax Reform Impact

• Early Results: Tax reform has yielded positive early results, but long-term impacts remain uncertain.
• Annuity Growth: Rising interest rates and increased disposable income are driving annuity sales, with potential for further growth if the Retirement Enhancement and Savings Act is passed.

Key Questions for Insurers

• Cloud Strategy: Is your organization prepared for a multiyear, phased cloud migration? Are you leveraging cloud for better analytics and agility?
• Talent Adaptation: Are you rethinking workplace structures and employee roles? How are you engaging the open talent economy and retraining existing staff?
• Product Innovation: Are you developing more flexible and personalized products? Are you exploring partnerships with InsurTechs to enhance your offerings?
• M&A Readiness: Are you considering M&A as a growth strategy? How will you manage the risks and costs associated with such deals?
• Regulatory Compliance: Are you adapting to new regulatory requirements around cybersecurity and data privacy?

Outlook for 2019

• While 2018 was a positive year for many insurers, 2019 presents both opportunities and challenges.
• Economic and regulatory uncertainties, such as the potential for a recession and evolving privacy laws, will require strategic adaptation.
• Insurers must focus on innovation, efficiency, and agility to remain competitive in a rapidly changing market.