EY’s 2022 Global Insurance Outlook Report
Three megatrends are reshaping the insurance industry and leaders who address them with urgency, creativity and bold action stand to be richly rewarded, EY’s 2022 Global Insurance Outlook report finds.
A spokesperson said, “The report highlights ecosystems and open insurance, workforce transformation and sustainability as key areas of opportunity for insurers seeking a pathway to growth amid a challenging macroeconomic and competitive landscape, as well as climate change and tech-driven disruption.
Craig Redcliffe, Partner and Regional Insurance Leader, for the EY Region of the Bahamas, Bermuda, British Virgin Islands and Cayman Islands, said: “In their response to the Covid-19 pandemic, Bermuda’s insurers and reinsurers demonstrated their ability to undergo rapid and large-scale change to keep their operations running smoothly throughout.
“Industry leaders who show similar creativity and boldness now have the opportunity to thrive, if they act to harness technological opportunities, make their workplace attractive to rising generations of purpose-driven talent and craft solutions to help the world manage the threat of growing climate-related risk.
“With their well-earned reputation for innovation, Bermuda’s re/insurers have the capability to seize the opportunities for purposeful growth that will emerge from these major forces reshaping the industry.”
The company said, “The megatrends identified by the report are:
- Outside-the-box ESG solutions: As climate conditions worsen, future-orientated insurers are seeking more creative and innovative solutions, such as parametric policies and those featuring carbon offsets to help protect against the physical risks of climate change. In these endeavours, insurers must also improve pricing to accurately account for emerging risks and incentivise policyholders in enhancing the sustainability of their assets, for example pushing for green infrastructure to replace existing damaged infrastructure.
- Combatting the “Great Resignation”: Insurers need to address the traditional view of the industry as slow-moving and dull if they want to avoid a scarcity of key skills. In order to attract younger talent, insurers will have to take stronger positions on the social issues that matter most to rising generations of workers, such as diversity and inclusion and sustainability, and provide meaningful work, as well as offering flexibility, performance recognition and compensation models.
- Open insurance and the era of ecosystems: Consumers are increasingly willing to buy insurance from non-traditional sources, such as retailers, banks and technology platforms. “Open insurance” involves the sharing of insurance-related and personal data within a network, or ecosystem, of organizations collaborating to offer a service. Consumers, as owners of their data, would have the ability to specify which businesses can use their information and for what purpose. Well-designed and executed ecosystems will unlock a range of revenue opportunities for insurers.
Eleanor Fisher, EY Partner and Regional Sustainability Leader, said: “The process of embedding ESG principles into all aspects of management has moved into the implementation stage for leading re/insurers, who view it is as key to enhancing stakeholder value.
“With the influence of climate change on underwriting and investment portfolios alike, an enterprise-wide sustainability strategy has become a fundamental pillar of risk management. Re/insurers must also be ready for mandatory ESG disclosures in the regulatory pipeline, led by the recommendations of the Taskforce on Climate-related Financial Disclosures [TCFD].
“Among the insurance regulators moving in this direction is the Bermuda Monetary Authority, which has announced its intention to integrate ESG considerations, particularly climate-related risk, into its supervisory approach in 2022. *
“Re/insurers who take strong positions on ESG principles will also be well positioned to attract and retain employees who increasingly want to work for companies who share their values and demonstrate a commitment to corporate social responsibility.”
The full EY 2022 Global Insurance Outlook report follow below [PDF here]
