Amid rising geopolitical and economic uncertainty, more people want protection for what they value the most, representing growth opportunities for innovative insurers who can meet these evolving customer needs, a new report by EY has found.
EY’S 2023 Global Insurance Outlook explores the impact of macroeconomic, geopolitical and pandemic-driven upheavals on the global insurance industry.
The report highlights that protection and savings gaps are widening, due to a combination of climate change, cybersecurity threats and demographic forces. This development emphasises the relevance of insurance and its ability to protect individuals and organisations from threats.
EY’s latest insurance industry research, entitled Driving Purposeful Change in Uncertain Times, looks into these complex market dynamics and finds that business resilience is a high priority for insurers in anticipated recessionary conditions.
At the same time, it highlights the need for forward-looking insurers to address society’s largest threats through new risk solutions and value propositions.
Craig Redcliffe, partner at EY Bermuda Ltd. and regional insurance leader for the Bahamas, Bermuda, British Virgin Islands and the Cayman Islands, said: “The key takeaway for the insurance industry from this research is that customer needs have changed.
“The COVID-19 pandemic, macroeconomic uncertainty and geopolitical volatility have served to heighten risk awareness among individuals and organizations, stimulating demand for new protection options.”
Redcliffe said this environment affords opportunities for innovation leaders in the insurance and reinsurance market.
He said, “Creative thinking, partnership building and boldness is needed to develop new products and new business models that address today’s huge and growing protection gaps, especially in areas such as climate and cyber risk, life insurance and retirement products.
“Those who rise to the challenge of addressing these protection and savings gaps can enhance their relevance and create value, not only for customers and shareholders, but also for society.”
Ian Lomas, partner and Insurance Assurance Leader at EY Cayman Ltd., said: “This research drills down into the details of a risk landscape shifting in uncertain times.
“Customers are looking to the insurance industry for products tailored to their evolving risk profiles. Growth opportunities will be greatest for insurers who align their organisational purpose with an innovation plan to develop new and relevant risk solutions.”
Lomas said in this environment, corporate risk managers may turn to self-insurance options, generating a tailwind for growth in Cayman’s captive insurance market and opportunities for innovators to narrow the protection gap in areas such as climate, cybersecurity and health care.
“Innovation will also lead to new product and business model creation in the life insurance and retirement products arena, which represents opportunity for many of Cayman’s (re)insurers,” he added.
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