The Big Picture 2022 Insurance Industry Outlook

Introduction

Insurers have long planned for pandemic risk from operational, strategic and financial standpoints. Emergence from a global pandemic represents entirely different challenges that will continue to present the industry with a new set of risks and opportunities

The Take

COVID-19 has accelerated the transformation of the insurance industry in multiple respects. The role of technology in all aspects of operations has taken on even more critical importance in a work-from-home world. Financial fallout in the form of low interest rates, a renewed emphasis on access to liquidity, and greater appreciation for the potential emergence of black swan events have created even more impetus for companies to reevaluate their operating models and continued independence. The scope of underinsurance has been demonstrated as an issue not limited to the developing world or singular risks.

As greater visibility emerges into a post-pandemic world, insurers will be challenged to reevaluate how they interface with customers, distributors, investors and other key constituencies. New expectations regarding the industry’s leadership in driving transformational change from environmental, social and governance perspectives will continue to build across geographies.

These changes come against a backdrop of new and evolving financial, geopolitical, legal, technological and climate-related risks — many of which will require developing and implementing different pricing structures, underwriting, reserving and distributing. It is an environment that will reward the nimble, penalize the ill-prepared and threaten the continued relevance of those unwilling to shatter their status quo.