While we look to 2024, we see many challenges in the insurance industry, and we are optimistically meeting these. Insurance is a resilient industry with a deep sense of purpose that promotes protection for people, families and businesses and a safer future.
What is the macroeconomic outlook?
Global macroeconomic forecasts for 2024 show both Slowing GDP growth and continuous inflationary pressure. Talent shortages are most prominent in the US, where unemployment rates hover below 4% overall Approximately 2% of the insurance sector.
Major markets feel a headwind of consumer sentiment. Our research shows that US consumers are largely pessimistic due to prolonged recession concerns. Meanwhile, in the UK, consumer pessimism stems from uncertainty caused by recent tax changes and potential impacts on public services.
What can the industry expect?
P&C insurance companies’ top-line revenues move along with GDP. P&C carrier revenue growth is expected to slow to an average of 2.6% for 2024 and 2025. From 3.4% in 2023 (Swiss Re Sigma).
Conversely, the life insurance segment sees stronger demand for savings and retirement products. In emerging markets, revenue growth is expected to average 5.1% in 2024 and 2025. This revenue growth could mitigate the impact of the ongoing profitability and liquidity challenges the segment faces.
In most major markets, billing volumes and costs across the business line continue to rise. Some of this is an inflation-driven, cyclical systematic risk, such as social inflation, but the increasing number of NATCAT claims and demographic changes in aging, health and mental health remain here.
We remain optimistic about the insurance industry, but the challenges we face this year are real. Here are five forecasts for 2024:
1. Moneying AI
Since the launch of ChatGpt last year, there has been a wealth of generative AI discussion and speculation. The reality is that for years, major insurers have emerged on a journey of data, analytics and AI advancement. In 2024, we see excitement about Genai’s potential to give way to growing demand for important economic impacts from AI/Genai solutions. Insurers who have invested in data, analytics and AI capabilities will incorporate more Genai as a natural next step in their journey. Additionally, as AI plays a more autonomous role, there is a need to increase risk control of responsibility/ethical usage.
2. Alternative Human Capital Strategies
AI/Genai spread to decision support, processes and interactions across the insurance value chain. Fortunately, this comes when the industry is under pressure to deal with both looming workforce gaps underwriting and claim. In 2024, AI/genai is expected to be treated as a more complementary talent. Insurance companies also test sourcing models of closely held and traditionally developed “complex” work. These changes need the industry to move away from traditional talent development through knowledge management apprenticeships and standard practices.
3. Cost pressure boils and drives changes in the operating model
The pressure of continuous and sustained costs drives heads of departments and business units to ask, “Who is it anyway?” In 2024, the demand for increased autonomy and direct control of costs will increase as we increase the number of questions about internal frustration and centralized costs (and marginalized costs from portfolio shifts) allocation methodologies.
4. Risk portfolio shifts and capital reassignment
While industry convergence is not a new phenomenon, there are more and more industry players looking for eco-friendly pastures for P&C, Health and Wealth Management. Automakers want to provide P&C insurance. P&C carriers enter health products and services, and health insurance companies offer voluntary and supplementary benefits. For many insurance companies, the greenest pastures are in retirement spaces. Millennials and ZZ The biggest transfer of wealth in history Over the next 20 years. A value-driven approach to investment disrupts retirement and creates new opportunities for life/annual careers that provide value propositions that are aligned with value.
5. Service revenues rise while risk capital decreases
As new loss patterns increase coverage and volatility, insurers go beyond traditional product offerings and go deeper into advice/service to facilitate demand for ROE and capital. Tele-Health, Care Navigation, and Risk Mitigation Services will be a greater focus for careers after 2024.
