As insurance companies began business in the current year with a lot of uncertainties in the macroeconomic environment, changing consumer behavior, tightening regulatory environment as well as other market disruptions, analysts say that being nimble and adapting to changes will keep the industry ahead of shocks.
The analysts also believe that only companies that are able to move with new technology as well as innovative products will be able to survive in the medium and long term, while sustaining stakeholder’s expectation.
Industry regulator, the National Insurance Commission in its regulatory priorities in 2017 released to the industry said the current economic recession, other dynamic business drivers (including improvements in best practices and standard) and peculiar conditions of the Nigerian Insurance Industry have created need for high level of prudence, innovation, proactively, and agility in both operations and regulations of the industry.
Whilst insurance institutions need to take steps to minimize, if not avoid, the negative impact of externalities and ride on opportunities inherit in them, the regulator needs to ensure that customer protection and market stability receive priority attention, the Commission said.
Deloitte Centre for Financial Services in its recent report on Insurance Sector Outlook for 2017 said nimble will be the new normal in 2017 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.”
On what steps insurers consider taking in 2017, Deloitte observed that Insurers need to be nimble to prosper in a rapidly changing business environment. “To adapt to today’s rapidly evolving, consumer-centric culture, and increasingly technology-driven economy, insurers likely need to continually upgrade their operating systems, business models, and value proposition in 2017 and beyond. They should also consider undertaking an ongoing, holistic transformation of products, services, legacy systems, and business processes to drive growth, bolster efficiency, improve customer experience, and head off emerging competition”.
Steps to be taken according to the agency includes: Develop new products to meet emerging coverage needs in a sharing, connected economy; Expand digital distribution and virtual service to cut costs and gain competitive advantages; Enhance cyber risk management to stay ahead of evolving threats and comply with new regulations; Treat technology modernization as a journey rather than a final destination; deepen client engagement beyond renewals and claims while differentiating with ancillary services; drive IoT strategies beyond auto insurance for personalized pricing and risk-management incentives; Explore potential M&A opportunities to deploy excess capital, create scale, and add capabilities and facilitate InsurTech innovations by launching pilot tests and perhaps financing startups
However, even with increased automation, people power may yet prevail. On the staffing side, human capital can still make the biggest difference in securing a carrier’s future growth and profitability, as companies are going to need talent not just to replace the growing percentage of those close to retirement age in the industry, but those with new types of skills as well—more data scientists, for example.
Meanwhile, customer centricity is also likely to be a major factor. The timeworn phrase, “the customer is always right,” perhaps never has resonated louder than it does today, given the lack of brand loyalty and enhanced mobility of today’s web-savvy consumers.