Technology modernisation will boost outlook for life insurance, annuity
by Modestus Anaesoronye
August 16, 2017 | 12:25 am| | | Start Conversation
Life insurance and annuity business will receive a boost this year and going forward if insurers are able to deploy modern technologies to improve service delivery.
Deloitte Report on insurance sector outlook in the current year observed that amid challenges from regulatory disruption, increasing consumer expectations, and stagnant sales, insurers will likely look to accelerate technology modernization to drive growth and efficiency.
It noted that insurers face major systemic challenge, including pressures on profitability, new sources of competition, and evolving customer preferences which will create a need to develop innovative products and new distribution platforms.
On growth opportunities, the report says that new products, services, distribution channels, and sales and marketing techniques are becoming essential to spur faster growth in an underinsured market. For example, insurers can leverage telematics and IoT technology to make their life products more relevant to buyers with healthy living incentives, investment tips, and dynamic pricing, while robo-advisers can bolster life and annuities services for middle-market prospects.
In addition, many consumers may be shying away from complex life insurance and products that are hard to understand, so look for development of simpler policies designed to meet clearly defined needs, such as guaranteed income in retirement.
On operational transformation, legacy systems will require modernization to stimulate heightened efficiency, more precise risk selection and pricing, and stronger insurer/client relationships. Insurers can use such techniques as advanced analytics, robotic process automation, and other emerging InsurTech applications for core operations to streamline sales and underwriting and make the customer side of transactions more user-friendly.
However, life and annuity carriers face a number of challenges, including relatively modest economic growth, low-interest rates, and regulatory uncertainty. Even if, as expected, interest rates finally start to rise in 2017, increases from current historic lows are likely to be small and spread out. This, along with slowing global economies, could make it difficult for insurers to generate the returns they need to attract and retain clients.
Nimble will be the new normal this year as insurance companies confront a marketplace that is changing more drastically than perhaps ever before. In addition to macroeconomic, social, and regulatory changes likely to impact the industry, insurers are coping with longer-term, game-changing trends including the increased connectivity among household and workplace devices, the development of autonomous vehicles, and the rising threat of cyber attacks.
Big Read |