EY on how re/insurers can innovate amid industry disruption

EY on how re/insurers can innovate amid industry disruption | Insurance Business Australia

Reinsurance

EY on how re/insurers can innovate amid industry disruption

Navigating change with purpose-driven innovation and digital connectivity

Reinsurance

By
Kenneth Araullo

Commercial insurers and reinsurers are navigating a rapidly evolving landscape shaped by changing customer expectations, technological disruption, and competition from new and non-traditional players.

According to insights from consultancy EY, the industry is experiencing a shift from its traditional linear value chain to a dynamic value exchange, which is creating new opportunities for innovation and growth.

EY’s latest NextWave report outlines how inefficient processes and misaligned incentives of the past are being replaced by direct connections, real-time data feeds, and new services such as risk prevention.

The report suggests that the foundation many insurers established by automating core operations in the aftermath of the pandemic can now be built upon with analytics-driven capabilities essential for future growth.

A key recommendation from EY is for re/insurers to maintain a rigorous focus on client needs and a clear purpose to drive product and service innovation. Enhanced digital capabilities, increased organizational agility, and new talent across the enterprise are identified as critical elements for achieving operational excellence and stronger financial results.

EY identifies four focal points that are essential for leadership in the commercial and reinsurance markets:

Innovation – EY emphasizes that innovation should be guided by a clear purpose to deliver client value. The insurance industry’s role in protecting against significant threats such as cybercrime, climate risk, and geopolitical conflicts is more relevant than ever.

As insurers develop tailored policies based on deep client insights, these policies will gain greater value when aligned with a clear purpose that generates social value. EY suggests that new and enhanced services will eventually replace existing policy types within holistic value propositions that include proactive risk prevention and advisory services.

Connectivity – According to EY, building on baseline digitization is crucial for optimizing the entire business. To deliver insight-driven services and tailored products at scale, insurers need sophisticated front-end solutions, highly automated back-office operations, and advanced data management and analytics capabilities.

EY advises insurers to focus on transformation investments that provide value across the business, rather than merely implementing point solutions. The report highlights that real-time connectivity enables a dynamic value exchange, and common data standards within the industry will facilitate quick, transparent data sharing.

Community – EY notes that collaboration and co-creation are key to driving value, as few insurers can address all customer needs alone, especially in the face of large-scale threats like climate change and cyber risks. By forming or joining ecosystems, insurers can leverage extensive connectivity and focus on roles that align with their core strengths.

EY suggests that insurers should design ecosystems around distinct customer needs, deploy advanced IT architectures for secure data sharing, and utilize outsourcing to scale operations in line with demand.

Talent – Despite technological advancements, EY underscores the importance of putting humans at the center of the insurance enterprise. Creating a culture that values collaboration and creativity is essential for attracting the right talent.

EY recommends that insurers seek diversity at executive levels, embrace leadership that links work to a broader purpose, and build compelling employee value propositions to develop a more diverse and effective workforce.

Overall, EY’s insights indicate that success in the commercial and reinsurance markets will depend on insurers’ ability to innovate with purpose, enhance connectivity, collaborate effectively, and prioritize talent development in an increasingly complex and competitive environment.

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