The past few years saw an unprecedented mix of factors impact the resilient global insurance industry. COVID-19 instigated a jump in claims, and turned global supply chains on their head, particularly in the financial industry, severely impacting other industries like tourism and aviation. To get through this period, these industries turned to their insurers to reimburse them for lost business. Now, global inflation continues to rear its head.
COVID-19 had a dual impact on the insurance industry. On the one hand, the pandemic raised concerns among life insurance companies about whether it would be possible to process all the reimbursement and claims due to the spike in death rates caused by the virus. On the other hand, the outbreak resulted in more people seeking an insurance policy to safeguard them against uncertainty. This in turn increased sales for companies.
Despite the circumstances, the global market for insurance was valued at $9.8 trillion in 2021 and is forecasted to grow from $5.6 trillion in 2022 to $9.8 trillion 2027, according to BCC Research.
According to the report “The Insurance Industry for Today & Tomorrow,” published by Capgemini, consumers, who are increasingly Gen Z and Millennials, may move from traditional approaches such as one-stop solutions to apps to manage and buy their policies. This is expected to cause reduced brand loyalty and the need for a greater emphasis on groundbreaking engagement for customer retention. The report concludes that in the new insurance ecosystem, it will become imperative for insurers to develop the right partnerships and use digital technology for real-time integration with these partners.
Furthermore, a burst of new players are entering the landscape. Retaining customers is therefore becoming difficult, but innovative tech platforms such as AI-based applications and AI integration in web platforms could help insurers to maintain their market positions. As the insurance ecosystem adopts digital technologies such as cognitive computing (machine learning, AI, advanced predictive analytics), the Internet of Things (IoT), wearables and other sensor-based devices, blockchain technology and robot process automation (RPA) in insurance claims, the insurance penetration rate is expected to increase in the forecast period.