2020 Insurance Industry forecast: “best of times and worst of times.”
Updated: Feb 9, 2020
The EY annual Global Insurance outlook report said low interest rates, little or no growth in most regions around the world, the increasing cost of natural catastrophes, intensifying regulation and more competition from companies offering superior customer experiences, together with the possibility of a global recession in 2020 is a clear and present danger to the insurance industry.
The top priority for 2020 is expected to focus on cost and operational efficiency. Many insurers desire to achieve that through loss ratios improvement, a better risk selection or more accurate pricing.
“The macro-economic policy stance adopted to date has been lopsided and insufficiently co-ordinated to give a sustained boost to aggregate demand, with adjustments left to the vagaries of the market through a mixture of cost-cutting and liberalisation measures. Ephemeral growth spurts and financial volatility have been the predictable results.”
Cost optimization is critical, but it can’t be allowed to stifle innovation. In fact, one of the goals of cost reduction must be to free resources to invest in transformation and product innovation programs, which are necessary for insurers around the world.
Cut the Cost
The vital key to #CutTheCost issue is optimizing the operating model. This requires a deep understanding of the human processes, employee skills, technology and organizational structures. By digitizing the whole insurance processes, insurers can driver operational excellence in sales back-office, reducing claims processing time and cost, while at the same time improving customer service.
An obvious process automation can only serve an existing process which limits other underwriting possibilities and causing loss of sales. data models built on a traditional rational data may not allow the insights that BIGDATA platform may provide. Facio adjusts the underwriting process in addition to the premium based on real time insights. for instance in home insurance, risk exposure should limit the sales for a specific geographical polygon. Our solution allows optimisation of risk exposure over geography units by dynamically change premium (or discounts) for quotes for homes in different locations.
Outsourcing IT solves the conflict of operational excellence and IT overheads by using
a service rather developing software in-house which can dramatically improve operation while cutting costs.