NEW YORK, Dec. 7, 2016 /PRNewswire/ -- The coming year promises to be a year of continued disruption on several fronts for the insurance industry: changing consumer demands, digital technology advances, cybersecurity and the shifting political landscape are just a few, according to the 2017 EY US life-annuity and property-casualty insurance outlooks.
In both reports, the slow growth of the US economy, coupled with adapting market shifts, are predicted to be prominent factors in 2017. However, converging demographics and regulatory and technological changes are also opening new opportunities for insurers to reach consumers and to strengthen their workforces.
Technology will be a driving force in 2017. According to Douglas French, Principal, Ernst & Young LLP, "Insurers are looking at different technologies. They are looking at machine learning to make underwriting decisions. They are looking at all kinds of data, from medical to behavioral. They know they cannot take months to underwrite a policy. They need to do it in days – and soon, even quicker."
Insurers must go beyond the customer experience and consider internal stakeholders as well. Dave Hollander, EY Americas Insurance Leader, sees this as an ideal time to make plans that take into account the future of the nature of work. "Insurers now have the opportunity to introduce new technology, such as robotics, and more effective workforce management activities," says Hollander. "By taking out repetitive tasks, they can produce an even more industrious and stimulating work environment for people."
Below are the top strategic priorities from the 2017 EY US life-annuity and property-casualty insurance outlooks.
Life-annuity strategic priorities
- Prepare for regulatory change. From rules on consumer protection and transparency, to financial solvency and cybersecurity – and now a potential shift in overall policy direction – the regulatory landscape for life insurers has never been more complex. Insurers should develop a strategy to comply with the new DOL fiduciary rule, and be prepared to course-correct; as well as confirm that internal systems can keep up with regulatory change overall.
- Stay centered on the customer. The customer can be a valuable compass to companies mapping a strategy in changing times. Insurers should make use of this resource by applying analytics to gain deeper customer insights, creating a strong cross-channel customer experience and rethinking go-to-market approaches to meet changing investor needs.
- Re-evaluate strategies for a changing marketplace. With the industry in transition, and a new administration taking office, this is an ideal time for management teams to carefully asses their current market position and plan for where they would like to be, long term. In addition to reassessing strategic positioning for the years ahead, insurers should also consider using M&A to improve competitive positioning and should also look to find the right InsureTech strategy for the firm.
- Take digital transformation to the next level. 2017 will be a year of continued experimentation, and the focus of innovation will start to shift from reducing costs to reinventing products and business models. To do this, insurers should be prepared to enter the next phase of digital innovation by getting control of data across the enterprise and by using technology to improve current business approaches.
- Make cybersecurity a top strategic priority. Given the vast amount of personal and health data that resides in insurance firms, and their complex vendor relationships, building a robust data security system is both crucial and challenging. To do this, insurers should look to make cybersecurity a continuous business activity by drawing on technology and people to secure data.
- Close the talent gap. 2017 is the year to determine the critical workforce skills that insurers will need to drive the business forward. Insurers can build new talent management strategies by assessing whether the firm has the needed talent for the future and by creating clear pathways to transfer knowledge.
Property-casualty strategic priorities
- Focus on customer-driven innovation. To adapt to a fast-moving marketplace and differentiate themselves from competitors, insurers must stay laser-focused on the customer and adapt their go-to-market strategies. To do this, they can nurture a culture of innovation, which will help accelerate the development of new products and business models.
- Use technology to drive top- and bottom-line performance. In the face of shrinking returns, insurers will need to apply advanced analytics systematically across the value chain, as well as drive costs savings by drawing on robotics to automate insurance processes and build smart technology into future plans to remain competitive.
- Put cybersecurity high on the corporate agenda. As with life-annuity insurers, cybersecurity is also a key topic for property-casualty insurers. In 2017, cyber risks will increase exponentially as digital technology becomes more pervasive, and cyber-attackers more sophisticated. Insurers should prepare for the next stage of cyber-risk and implement an active defensive system to protect against attack.
- Rethink strategies to attract, develop and retain talent. With a large percentage of the workforce retiring in the years ahead, and digital transformation accelerating, 2017 will be a good time to take a hard look at future work needs. Insurers can start by understanding the Millennial mindset and identifying the digital expertise they will need in the future.
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