Deloitte Insurance Outlook 2024: future success hinges on insurance industry’s ability to achieve customer-centricity and elevate purpose

Escalating global risks – from climate change to cybercrime – are challenging the insurance industry’s capacity and readiness to react as society’s “financial safety net”. Deloitte’s Insurance Outlook 2024 analyses how these colliding forces could be the catalyst that will increase the rate of reinvention through which the industry will achieve its business goals and strengthen its role in society.

Deloitte’s analysis shows that more insurers are aware of that situation. By simply looking at numbers that appear to be financially unbearable risks, they have decided to act to prevent risks from happening in the first place, mitigating loss severity and closing life and non-life protection gaps in global markets.

Arthur Calipo, Deloitte Asia Pacific Insurance Sector leader, says, “Asia, as the most disaster-prone region in the world, is suffering rocketing economic losses from natural disasters, yet insurance penetration in the region remains low, leading to a serious protection gap. Going into 2024, the insurance industry is at the precipice of considerable transformation, gearing up to augment its overall mission to distribute risk to help reduce financial uncertainty and make accidental losses manageable to the benefit of society.”

The insurance industry has always played key roles as economic “shock absorber” and “social stabiliser” in every economy. “Currently, exploring high-quality and sustainable development is China’s top priority. Deloitte believes Insurtech, green insurance, inclusive insurance, and digital insurance will be the priorities for most insurers in the coming years,” says Joanna Wong, Deloitte China Insurance Sector leader.

Innovation and stronger client relationships are keys to insurers’ growth and profitability

Driven by the market, policy and regulations, the insurance industry in China is undergoing a multidimensional transformation to achieve “customer centricity” and provide comprehensive risk protection and solutions to individual and corporate customers, from products and services, channel marketing, operation model, and digital capabilities to ecosystem plays, according to Wong.

Calipo adds, “More insurers in Asia Pacific are already investing in technology platforms and ecosystem partners to improve their customer experience by offering simplified customer journeys or low-cost, customisable products across life, health and wealth.”

This shift to a more customer-centric business model will likely require advanced technology adoption and modification of company culture to help minimise siloed interactions, enhance collaboration among employees, and increase accessibility of customer data—but skill sets might need to be augmented.

AI and advanced analytics open new avenues to enhance and personalize customer experience.

Digital transformation has topped insurers’ agenda for several years, yet consumers still yearn for digital services, interfaces and experiences that are comparable to those of fintech and e-commerce providers.

“Adoption of new technology, including generative AI, can help insurance companies achieve this necessary transformation. More proactive insurers are also embracing enterprise-wide culture change to reduce silos and elevate their workforce to acquire the speed and agility associated with customer-centric models,” says Wong.

“At the crossroads of transformation, it is critical for insurers to think ahead and be future ready. The key question is how to understand emerging technologies and solutions to bring their business models and the industry value chain into the next phase.”

Insurers can reform brand perception through sustainability ambassadorship

As regulatory bodies and stakeholders seek more commitment and information disclosure on sustainability, climate and equity (SC&E), Deloitte’s insights show insurers are pivoting to incorporate more impactful SC&E into their corporate strategies. With their vast experience in assessing and managing risks, insurers are well-positioned to communicate on risks and opportunities and influence executive’s decisions and strategies across industries to create better workplaces, marketplaces and have a true societal impact.

Ongoing commitment to ensure diversity, equality and inclusion (DEI) could prove to be a differentiator in the market. Insurers should consider advancing their financial inclusion initiatives beyond their organisations, with more suitable offerings of products and services when considering social goals. Insurers can also consider increasing coverage reach and affordability for unserved and underserved segments of the population and regions, working with governments and industries to provide better access to long-term savings and health insurance, and diversifying their workforces to better serve various demographics.

“Facing various challenges such as talent shortages and rising expectation for societal impact, the insurance industry must continue to innovate and role model for their clients and communities to realign society’s perception of its brand to its true mission: to create a better life for all,” adds Calipo.

Key insights from the Insurance Outlook 2024 and the implications to China’s insurance sector were presented by Wong at Deloitte’s Insurer of the Future Summit 2023, held recently in Hong Kong, where industry leaders analysed the interactions between providing health, wealth and retirement protection in Asia to fit the new insurance landscape. With the theme of Health, Wealth and Retirement in Asia, this signature event brought together more than 120 senior executives, industry professionals, and solutions providers from sectors including insurance, life sciences and health care, wealth management, tech companies, and retirement community specialists.

Click here to learn more about the Insurer of the Future Summit 2023: Health, Wealth and Retirement in Asia.