The insurance industry is known to have a cautious approach when it comes to change. In many ways, that’s a good thing, especially at times when managing risks prudently. But insurers are also the ones who adapt very slowly to changes and tend to stick to their legacy systems, both in terms of technology and business operations, especially in the face of a changing competitive landscape and ever-higher consumer expectations.
Also See: 5 Market Forces Driving Change in Insurance Carriers’ Strategy
A latest P&C industry survey reveals that insurers are very much aware of the changes affecting the industry. Also, they are gearing up to embrace those changes through increased IT investments, transforming their IT systems and many other ways. Their responses to adapt to changes reveal opportunities, challenges and trends in the areas of claims, underwriting, technology, social media, contact centers and organizational maturity. [@PCITplus]
Here are seven main factors insurers consider are affecting the insurance industry the most:
- Slow economic growth and low interest rates pushing insurers to focus on underwriting discipline, loss and expense management, retention and growth acceleration
- High competition and emergence of startups stimulating the market. As a result, insurers are emphasizing on the question of how much rate is sustainable in the marketplace
- Major catastrophes leading to increased complexity in managing balance sheets impact
- Demand for capital investment continuously rising with rapid advancement in technology
- Reduction in claims loss costs and loss adjustment expense, as well as improvement in reserve management practices, are offsetting low investment returns
- Market getting more competitive through use of analytics, big data, predictive modeling etc.
- Social media continues to evolve in the areas of claims, underwriting and servicing
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