Challenges for insurers in 2024

The global insurance industry needs to reinvent itself in order to meet the new needs of its users. According to McKinsey & Company, the main drivers of change for insurers are: digital transformations, the increase in environmental, social and governance concerns and the current unstable economic landscape.

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One of the key roles of InsurTech is to generate new ways of innovation that can add value to insurance companies and also allow them to stand out in an increasingly competitive environment.

Here are some of the forces that will create more opportunities in 2024:

Increase in the average age of the population and uncertainty of pensions

According to the projection of the National Institute of Statistics (2022-2035), in 2035 there will be more than 12.8 million people over 65 years, which will represent 26.5% of the total Spanish population. If we add the recent news about the future of pensions, the picture is complex.

“In order to maintain the current relationship between average pension and salaries in the future, it will be necessary to reach 27 million contributors in 2050, 10 million more than at the present time.”

As the BBVA research indicates

Seeing these data, there is no doubt that the insurance industry will be able to help many citizens to plan their retirement.

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Rise in nominal interest rates and fall in real rates

The Big Apple-based consultancy indicates that the first ones will remain high in the near future as central banks seek to control inflation. For this reason, life insurance will be able to take advantage of the trend to expand its margin in the coming months.

According to this, we could see profits grow whenever entities increase ROE to meet shareholder expectations. Higher interest rates are also expected to lead to credit deterioration, which would translate into higher defaulting and rating migration. This can also affect investment portfolios.

The key role of technology in coping with change

The expectations of the customer keep increasing regarding the level of attention and service. Their demands have to do, above all, with the digitization of products and their availability at any time and location. With this in mind, even the most efficient insurers must update and look for new business models.

Knowing the latest trends and anticipating which technological innovations will be most important in the world of insurance in the short and medium term is essential to be able to anticipate and improve the offer of products and services.

How to generate sales opportunities for insurance and financial products: up selling and cross selling with open banking

As we already mentioned in our post about open banking, insurers are aware of the advantages that this technology offers to increase their business volume. According to the Experian study:

39% of companies have already invested in open banking and another 47% plan to do so.”

Business and consumer insight report 2022

The appeal of open banking is evident for insurers, as it provides them with knowledge that they can transform into an improved customer experience. It also means an increase in the accuracy of solvency assessments. The key question is: How to start using it?

Perhaps because of the savings in time and money that it entails, many entities decide to trust InsurTech startups to apply this technology. We are technology partners with proven experience and the ability to launch innovative tools to the market in a short period of time and with lower costs than internal developments.

Due to the knowledge obtained through our COCO{Insurance} tool, which uses AI, machine learning and NLP, companies can offer their customers hyper-personalized products and services, improve engagement on their digital platforms and increase their turnover.

Open banking in insurance companies: how can they benefit?

Some of the advantages of using a tool such as COCO {Insurance} are:

  • Identify insurances in progress, expiration dates, competitors.
  • Discover financial and non-financial assets: real estate, vehicles, etc.
  • Know the user in depth: consumption habits, debts, non-payments, income, etc.
  • Use bank aggregation to perform an analysis of the risk profile.

These developments are easily integrated into the digital platforms of insurers, via API. The white label modules also allow its look & feel to be adapted, so it will perfectly match with the entity’s digital platform. The user’s transactional data is displayed in order and categorized in a dashboard that allows detecting new business opportunities at a glance.

Let’s not forget the importance of financial evangelization to build customer loyalty. It has been shown that helping users to make better decisions for their household finances is key to retaining them and getting them to recommend your products and services.

In short, insurers have at their fingertips the possibility of entering a new era of business opportunities, competing at the same level as banks due to the analysis of customer transactions.

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