Financial performance of the UK GI market has been turbulent and, in some cases, underwhelming over the past decade. The pressure on insurers to reverse this trend has been exacerbated by the COVID-19 pandemic.
There’s no doubt that GI leaders are facing some difficult decisions – including how to continue to attract talent in a workforce with new objectives and changing expectations around their ways of working and workspaces; how to leverage new technologies to survive and thrive; and how to address the likelihood that the profitability of traditional business lines could falter.
We believe the following trends will play a leading role in defining the new business landscape:
1. ESG will come into sharp focus – the wealth and investment management sector has seen heightened interest in the importance of ESG factors, and we have already seen the insurance sector make changes. However, ensuring investment portfolios appropriately consider ESG is not the full story for insurers – we expect to see insurers actively consider ESG for cover and pricing decisions, as well as playing an active role in providing guidance and support to help their clients improve and deliver on their sustainability objectives.
2. The Future of Work is already here – Hybrid working, reduced office footprint, tech-enabled teams. 18 months ago many leaders and change makers would have said “it doesn’t work for us or in our industry”, but the pandemic has shown companies and their employees that there is another way that can deliver a better employee experience and reduce costs.
3. Customer Experience (CX) and customer acquisition will become the central battleground for revenue - though many carriers within the GI market have woken up to the importance of customer experience and invested heavily, this trend will continue to gain traction as the needs and expectations of consumers shift become harder to attract and retain.
4. PCWs still have a role to play – for many carriers, price comparison websites will remain a strategic distribution channel. However, regulation looks set to disrupt some of the tactics employed by these sites, whilst switching may fall – price comparison websites will remain the ‘mouse trap’ that many people will bank on as the first point of their customer journey.
5. Product innovation will play a greater role – though the rate of change in society as a whole has been fast-paced, this hasn’t translated into materially different products or services. Insurtechs have made inroads in this area, but we certainly aren't living the ‘swipe and go’ panacea many prophesied a few years ago. As products and services continue to be commoditised (and simplified) over the coming years, margins will decrease. As a result, insurers and brokers will need to find their next source of untapped, margin-accretive revenue.