The tough economic landscape has created a challenging environment for insurers to operate in, with rampant claims inflation and an increasing regulatory burden contributing to a “perfect storm”.
And it was under this setting that Insurance Times acting editor Yiannis Kotoulas spoke to KPMG insurance partner and former ABI director general Huw Evans, AXA Retail interim CEO Anna Fleming, and Insurance DataLab co-founder Matt Scott to discuss how this was affecting insurers.
Fleming said that while perfect storm was an overused term in the insurance industry, that was the right way to describe the situation the market currently finds itself in.
“If you think about the inflation that we’re facing at the moment, it is something that many insurers haven’t seen for a long time,” she said. “The cost-of-living crisis is making things very challenging for our customers, and that puts pressures on our agents, because they are getting some unhappy customers calling up about some quite significant price increases.
“The macro-economic environment is still not great, and we're probably facing into a change of government. So, there's a lot of things that are up in the air at the moment, which makes it extremely challenging for everyone, and insurers are no different."
And Evans said that while insurers will have previously dealt with many of the challenges facing insurers today, it is the combination of these factors that is proving most challenging.
“Most CEOs I’ve spoken to have just found the sheer range and combination of these challenges to be the biggest challenge, rather than any one of them in particular, most of which they will have dealt with at some point of their career” he said. “As a result, there’s been a real focus for firms on ways of working, and how they can work in a more agile way to try and deal with so many things that are happening all at the same time.”
Scott agreed with his fellow panellists and said that such a challenging set of market conditions means insurers need to keep abreast of market changes and respond quickly when they occur.
“With so much volatility in the market, no one can really pre-empt every scenario – there's going to be something that happens that no one expected,” he said. “So, insurers need to be able to react quickly, and make the adjustments needed to get themselves back on the right heading.
“Strategies are great for setting that north star, that's an essential part of any business, but with so many crosswinds in insurance at the moment, and how that's affecting market dynamics and customer behaviour, being able to make small, incremental adjustments, is vital for long term sustainable success.”
Scott added: “This means that insurers need to keep their finger on the pulse of how the markets performing and what how their competitors are responding.”
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