As 2024 draws to a close, now is a good time to reflect on what the insurance industry has accomplished, what surprised us, and how long-term trends are shaping up.
From an industry performance perspective, 2024 is shaping up to be a strong year. Driven by rising interest rates and continued (but falling) interest rates, carriers see Global insurance premiums increased by 4.6% By 2024, it will exceed the average of 1.6% over the past five years. Growth is driven by life insurance, which will reach a decade high of 5% in 2024, Due to the impact of the hard market, non-life insurance grew at 4.3%, higher than the 3.1% CAGR over the past five years. In 2024, life insurance and non-life insurance premiums will account for 43% and 57% of total premiums respectively. Stable economic growth and a resilient labor market continue to support the industry.
From a qualitative perspective on these financial and operating results, we observe the following:
- Artificial intelligence drives significant economic impact.
According to an Accenture global survey of executive clients, 87% of operators (91% P&C; 82% L&A) have achieved material financial benefits through the use of AI. The industry has monetized powerful production solutions to enhance underwriting and claims settlement for all parts of the book. However, in a world of ever-increasing expectations, the need now is for “scale” impact (i.e. moving from impactful individual use cases to impact across functional or value chain areas).
- Insurers are meeting growing demand for core functions with alternative talent strategies.
Underwriting functions, long plagued by an aging workforce and outdated processes, are seeing some relief in 2024, with artificial intelligence and gen AI allowing senior underwriters to apply their expertise in higher-value areas such as business development and negotiations. A prime example is QBE, which is scaling its industry-leading AI underwriting solution and replicating it across multiple lines of business. With the help of AI, QBE can now process (i.e. extract and derive insights from) 100% of the submissions received from brokers and drive higher quote-binding rates by focusing on underwriters with the highest value submissions.
Insurers are also executing strategies to meet growing regulatory and capital requirements without increasing headcount by leveraging talent pools outside the organization and in lower-cost geographies. For example, many insurance companies and reinsurers source high-end actuarial, loss/CAT modeling and capital allocation resources from India, which has Growing actuarial talent pool.
- Optimizing operating models and segment growth is a recurring theme.
Efforts to reduce costs in recent years have left many department and business unit leaders seeking greater autonomy and cost control. In 2024, we see insurers across business lines and geographies streamlining corporate centers and emphasizing optimization or strategic adjustment Their operating model and greater leadership focus Customer and product segmentation.
- The changing risk landscape is driving growth strategies and capital reallocation across industries.
Insurers recognize the growth potential in the health sector and are building health businesses and exploring opportunities in emerging health risks. For example, Aviva Insurance Ireland offers support health level, An insurance company that offers customers a variety of plans at lower costs. At the same time, FWD Group is resolving Emerging health risks among gamers In the Philippines, insurance solutions are provided for gambling-related risks such as vision problems, insomnia and migraines. Care navigation, telemental health and telemedicine services also grew, with the combined digital health market growing 16% to $172 billion.
In 2024, retirement takes center stage. Concerns about longevity risks and retirement readiness have fueled concern and demands for change. Annuities set record sales for the fourth consecutive year as investors take advantage of higher interest rates and question whether defined contribution and public plans can provide adequate retirement income. In China, workers participating in public basic pension insurance are allowed to participate Voluntary opening of a private pension accountalleviating some of the systemic pressures brought about by the rapid aging of the population. More Millennials are poised to benefit from the great wealth transfer, but lack interest in traditional career paths and are leaning towards Financial Independence, Retire Early (FIRE) move.
- A prevention mindset can generate service revenue and reduce losses.
Now, risk mitigation is the bet that has more insurance companies and their customers turning to preventing injury and illness. Available on 90% of new cars in the U.S. Standard automatic braking. By 2024, the global advanced driver assistance system market will grow by 17% (Statista). Finally, genetics Cancer screenings and MRI scans, such as those offered at a discount to John Hancock customers Work with Prenuvoenabling early detection and better mitigation of health, disability and mortality risks.
Looking to 2025
As we enter the holiday season, there is reason to be optimistic. The insurance industry continues to operate from a strong position.
