Despite turbulence in the global economy, the insurance industry remains resilient by continuing to generate growth around the world and maintaining overall profitability.

According to the Life Insurance Association of Malaysia (LIAM), force premiums in Malaysia are experiencing growth. With this positive outlook on premiums, economists suggest that Malaysia will be making forward progress as trade tensions and monetary policies ease concurrently. “Although we are observing growth, any additional developments will still likely require additional effort by the insurance industry to accommodate looming consumer needs,” said Justin Ong, Financial and Regulatory Risk Leader, Deloitte Malaysia. “Insurers should put an emphasis on how to grow their companies, run it more efficiently and productively or meet rising regulatory compliance demands. Insurers should also consider how to reposition themselves for success throughout the next decade to adapt to changes in consumer purchasing preferences, property use, and work habits,” he added.

Looking ahead to 2020 and beyond
While most insurers are focused on seeking expense efficiencies, most also keep investing proactively. More insurers are also looking to bolster core systems, add capabilities, and enhance customer experience through artificial intelligence (AI), digitisation, new sales platforms, alternative product development, and other innovations. Many are beginning to pivot from investments to support business as usual to financing innovations facilitating more fundamental business model changes.

Growing the insurer
Consumers have often been hesitant to buy annuities due to concerns about associated fees and potential surrender charges, the product’s complexity, and complicated tax rules, as well as fear that if the insurance company behind the annuity goes under, the guaranteed income stream could vanish. Annuity providers should take into account the ways to simplify and rebrand retirement products, enhance the sales process, as well as improve public perception of the value proposition versus investment alternatives so more will opt in if given the chance. The products and sales process should be revised, to better meet consumer needs.

Eliminating consumer skepticisms is one of the ways to grow an insurer. For example, insurers could repackage annuity products by embedding more flexibility and liquidity, giving customers better control of their investment. Putting annuity features within managed accounts and building glide paths within the products to gradually shift to annuitisation may also help increase their appeal. Customer relationship management efforts should be facilitating a more mature set of capabilities for sales management, both in terms of direct-to-customer sales, as well as for producers. They should also be enhancing post-purchase efforts, including upselling and cross-selling, while adding ancillary services.

Running the insurer
With a preference for the technology industry, a generally negative perception about working in insurance, and lack of knowledge about how the industry functions, only 4 percent of millennials are interested in working for the insurance industry. With the Fourth Industrial Revolution sweeping the globe, digital transformation has changed the nature of work in the industry, as well as talent needs. In underwriting and claims, for example, there is a growing demand for those with higher-level skills and a more entrepreneurial mindset to get the most out of analytics, AI, and other advanced technologies. At the same time, insurers are being challenged to become more flexible by offering alternative staffing opportunities. Insurers will need to step up efforts to raise awareness about potential insurance careers among students and young job seekers, particularly through social media. To attract Gen Z, carriers should also work with universities to spotlight the industry’s technological evolution.

Regulating the insurer
As insurers increasingly step outside their infrastructure borders, they are more exposed to cybersecurity risks. Cyber risks are also rising with expanded use of connected devices, forcing insurers to defend against attacks. While technology helps insurers better engage with customers and enable new products and service capabilities, they can make it more difficult for the cybersecurity function to keep pace. Meanwhile, as insurers up their own games with AI, they should be aware their adversaries are likely taking advantage of the same advanced technologies to discover new vulnerabilities and propagate malware to exploit them. Looking ahead, the rise of quantum computing and 5G capabilities could exacerbate cyber threats considerably. To combat these potential cyber threats, insurers should be incorporating cybersecurity into development of new systems, applications, and products right from the get-go. Insurers must also ensure regular patchwork for existing infrastructure, systems, and applications.

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