We are all aware these are challenging times for the insurance industry. Insurers were tested on a number of fronts in 2014, from the Financial Conduct Authority’s thematic reviews to fundamental pension reform. However, despite a tough year, insurers have adapted well and we are at an inflection point where they can reset their sights on growth.
With this in mind, we have highlighted five key themes which will influence and impact insurers in 2015 and beyond:
Insurers handle large amounts of data but few have yet to use that information to both excel in customer service and develop a greater understanding of customer needs.
Following years of tightened spend on technology, we can expect the tide to turn in 2015. Legacy systems will be overhauled and technology will play a crucial role as insurers promote digital channels and self-service options.
Companies are moving from pure insurance into the long-term savings and wealth space. The increasing trend for bulk annuity deals is one way life insurers are scaling-up. We believe this market is set to grow significantly in the next five years.
Regulators play a key role in promoting transparency and ensuring financial strength but, the resulting pressure has placed a significant burden on insurers. Solvency II and pension reform are the key challenges for 2015. Insurers face a significant reporting strain as they look to digest the latest wave of technical standards and guidelines.
Business model change
All these themes will converge towards a point where we will see insurers embark on bold business model transformation in the coming months and years. Having the right talent to deliver change is crucial. With new players emerging in the insurance space, an increased focus on the customer and a greater digital understanding and agility will become more important.
The general election will also cast an interesting backdrop for the industry and will be felt across all sectors, not just financial services. But, to remain competitive and fend off challenges from disruptors, insurers must focus on building their position as trusted and secure institutions. Creating an inspiring brand, excellent customer outcomes and innovative ways to insure, will all be key to surviving, and thriving in this new landscape.
The pension reforms in April will open up a host of challenges and opportunities for the industry. We are proud to be working with the ABI on the issues around long-term savings and wealth and we have a range of exciting joint activities planned throughout the year.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.