Looking ahead to 2024, the insurance industry faces many challenges, but we are optimistic about them. Insurance is a resilient industry with a deep sense of purpose to protect people, families and businesses and provide a safer future.
What is the macroeconomic outlook?
Global macroeconomic forecasts for 2024 show both Slowing GDP growth rate And inflationary pressures continue. The talent shortage is most pronounced in the United States, where the overall unemployment rate has stagnated below 4%. Approximately 2% in the insurance sector.
Major markets are feeling headwinds in consumer sentiment. Our research shows that U.S. consumers are largely pessimistic due to lingering recession concerns. Meanwhile, in the UK, consumer pessimism is widespread due to uncertainty caused by recent tax changes and their potential impact on public services.
What can the industry expect?
The highest profits for non-life insurance companies vary with GDP. Revenue growth for non-life insurance companies is expected to slow to an average of 2.6% from 2024 to 2025, down from 3.4% in 2023 (Swiss Re Sigma).
Meanwhile, the life insurance sector is seeing increased demand for savings and retirement products. Revenue growth in emerging markets is expected to reach an average of 5.1% in 2024 and 2025. This revenue growth may help cushion the impact of the continued profitability and liquidity challenges faced by the sector.
In most major markets, claims volumes and costs continue to rise across lines of business. Some of this is cyclical due to inflation, but systemic risks remain such as social inflation, rising NatCat claims, and demographic changes in aging, health, and mental health.
While we remain optimistic about the insurance industry, the challenges we face in the coming year are real. Here are his five predictions for 2024:
1. Monetization of AI
There has been a lot of discussion and speculation about Generative AI ever since ChatGPT was announced this time last year. Call it hype. The reality is that major insurance companies have been working on advances in data, analytics, and AI for years. In 2024, excitement about the potential of GenAI will be replaced by a growing demand for the material economic impact of AI/GenAI solutions. Insurers that have invested in data, analytics, and AI capabilities will further incorporate GenAI as a natural next step in their efforts. We also need to strengthen risk management for responsible and ethical use as AI takes on a more autonomous role.
2. Alternative human capital strategies
AI/GenAI has permeated decision support, processes, and interactions across the insurance value chain. Fortunately, this comes at a time when the industry is under pressure to address pressing labor shortages in both countries. underwriting and Claim. In 2024, AI/GenAI will be treated more as an auxiliary workforce. Insurers will also test procurement models for “complex” operations that are closely held and traditionally developed. For these changes to become a reality, the industry will need to move away from traditional talent development through apprenticeships and standard knowledge management practices.
3. Cost pressures boil over, driving changes in operating models.
Ongoing cost pressures have led department and business unit leaders to ask, “Who is to blame, anyway?” In 2024, internal dissatisfaction and questions about how to allocate centralized costs (and lingering costs due to portfolio changes) will boil over, driving demands for more autonomy and direct control over costs.
4. Shifting risk portfolios and reallocating capital
Industry convergence is not a new phenomenon, but more industry players are looking beyond the boundaries of P&C, health, and asset management for greener areas. Car manufacturers want to provide liability insurance. Property and casualty insurance companies are moving into health products and services, and medical insurance companies are offering optional additional benefits. For many insurance companies, the greenest pastures are space for retirees. Millennials and Gen Z will benefit from this. The largest transfer of wealth in history Over the next 20 years. Their values-based investment approach will disrupt retirement and create new opportunities for life and annuity companies that offer values-aligned value propositions.
5. Service revenue increases while risk capital decreases
As new loss patterns drive premiums and volatility, insurers will move deeper into advice and services beyond traditional product offerings to improve RoE and ease capital needs. Sho. Telemedicine, care navigation, and risk mitigation services will be areas of greater focus for carriers in 2024 and beyond.
