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Future of Insurance report 2020

News article

Publication date:

27 February 2020

Last updated:

18 December 2023

Given the importance of insurance to sustained economic growth, it should be a service that is recognised and appreciated.

Driverless cars are closer to being on our roads, but how will these vehicles affect your car insurance? The "Future of Insurance" special report, published in The Times, looks at how insurance must start meeting climate change head on not only to pay up when catastrophes hit, but also in their investments. It explores the lack of insurance available for the rising freelance workforce across the globe and the need for greater transparency in risk assessment in the age of personalisation. The featured infographic looks at the possibility to offer personalised insurance products within the coming years and why this will be transformative for the industry.

Featured in the report is an opinion piece from Sian Fisher, CEO of the Chartered Insurance Institute, on the importance of of appreciating the insurance profession:

Over the last 20 years, insurers have focused on convenience, especially for those buying and renewing cover. For most of us, this means our interaction with the insurance profession has shrunk to a few minutes spent online two or three times a year.

However, the impact that insurance has on our lives is far greater than this. Not only do insurers pay out billions of pounds in claims every year, insurance underpins many of the processes that keep society ticking over.

For example, when we are sick at work and our employer pays us an income that goes beyond the statutory minimum, there will often be a group insurance product funding these benefits and, indeed, effective support for rehabilitation may be arranged by the insurer as well.

Similarly, if a chain of distributors goes bust, credit insurance will help suppliers avoid going down with it. As new risks appear, such as cybercrime or new forms of terrorism, insurance helps to mitigate their impact on all those affected.

In a recent report, the World Bank found that over a period of four decades, sustained economic decline was concentrated almost exclusively on countries that had a below-average level of insurance premiums. A thriving insurance profession all but guarantees increasing prosperity for individuals, but an underdeveloped insurance sector turns sustained prosperity into a lottery.

New technology means the insurance profession is now at a crossroads. It can either get closer to its end-customers or retire even more into the background. As the transactional side of insurance becomes slicker and more automated, it may appear even less of a presence in our lives.

Ultimately, it may simply mean that we never take out an insurance contract or make a claim at all. Brands could simply provide us with guaranteed levels of service and use insurers funding capital in the background.

Instead of having buildings and contents insurance, for example, we may have a separate contract with a service company to provide cover. This provider will, in turn, use insurance as one of several sources of capital to maintain service-level agreements.

Alternatively, insurers could step forward and play a bigger role in managing risks. For example, by creating a service that is designed to coach us towards better behaviours.

In this scenario, traditional financial products will simply be a component in a larger range of services that include information and tools for people to manage their own risks more effectively.

In the corporate space, insurers and brokers can choose to be product suppliers, distributing traditional insurance products through increasingly demanding procurement exercises or they can become fully fledged risk managers, helping clients to understand and mitigate their risks themselves.

We already see this approach in areas such as cyber-insurance, where traditional insurance products rarely cover every risk.

Instead, brokers are developing services that help organisations plan for cyberattacks, while insurers are preparing benefits in kind, such as legal and reputational support that can minimise the impact of an attack as soon as it takes place.

Whether insurers step to the forefront of risk management or retreat to the background matters to us all. Services that are hidden tend to be undervalued, but services which make a connection with our day-today lives are cherished and thrive.

Given the importance of insurance to sustained economic growth, it’s important it should be a service that is recognised and appreciated. It is in all our best interests if the insurance professional choses to be in the limelight rather than the shadows.

 

Click here to download your free copy of the Future of Insurance report

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.