The global life insurance and retirement industry is facing an inflection point due to the convergence of challenging economic, technological, competitive, and societal headwinds. A new whitepaper from E&Y advisory outlined how insurers can navigate to growth in the next decade. The paper contends that the product-driven business models of the past will not be sustainable in the future, primarily because insurers can’t adapt quickly enough to changing customer needs. The mature markets, stringent regulatory requirements, low-interest rates, and tight margins further complicate the situation. Covid 19 pandemic has made it even more urgent for life insurers to redefine their role, take bold measures and address these changes. Here are the six scenarios of market leadership in the next decade based on research from EY:
The good news is that many global insurance leaders are already making large investments in digitization, innovation, and cultural change. Going digital has been a top priority as increased digitization not only helps reduce costs but also enhances customer experiences. The increasing adoption of predictive analytics, AI, and automation is gathering momentum in various business functions such as sales and marketing, operations, and risk management in this heavily regulated industry. According to McKinsey estimates, the potential total value of AI and analytics across the insurance vertical is approximately $1.1 Trillion.
Over the next decade, AI will be deeply embedded into the insurance value chain as the insurance industry embraces digital transformation. From automating manual processes in underwriting, eliminating errors and inefficiencies in claims processing, and enabling predictive insights to deliver superior outcomes, AI and machine learning in the insurance industry will provide unmatched power to insurers to address a multitude of problems and use cases, and help the industry navigate the daunting challenges:
As insurance carriers get better at leveraging data and implementing predictive analytics, the focus will shift from product-led to customer-centric models. The insurers’ adopting and investing in digital capabilities to unify data, advanced analytics, and people will ultimately make the industry more agile, efficient and transparent. The winners will go above and beyond, offering personalized products based on individual customers’ unique needs, proactive interventions for service, and enhanced customer experience.
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