Speaking to over 400 insurance industry executives at A.M. Best’s 15th Annual Review and Preview Conference in Naples, Fla., Tom Ealy, most recently COO of the Willis North America unit of Willis Group Holdings, presented the Company’s review of the industry’s top megatrends
Ealy, who is now Executive Vice President of Willis North America, identified eight key trends that should be top-of-mind for the insurance industry, as follows:
1. The nature of risk is changing and becoming more global – Powerful economic, technological, societal and ideological forces are making the world smaller and more risky.
2. The need to embrace technology for productivity – In part, sustainable competitive advantage can only be won through technology which enables employees to work smarter and clients to receive services with built-in reliability, speed, simplicity, and transparency.
3. A demand for differentiated value – The high quality vs. best cost tradeoff has been shattered; clients demand both today. At the same time, price is only an issue in the absence of value – clients increasingly demand contract certainty and that providers’ intellectual capital be put compellingly on display.
4. The war for distribution – Both manufacturers and distributors of insurance products are clamoring to get as close as possible to insureds of all shapes and sizes. Innovative aggregator, collaborative network, and MGA models are being built to tap into new sources of distribution.
5. The convergence of capital and insurance markets – Fueled by a combination of the availability of large pools of capital and more sophisticated risk modeling tools, structured financial solutions such as insurance-linked securities are becoming more prevalent.
6. Regulatory intensity – Regulation has never been stronger or more complicated, with a two-tier system for agents and brokers. The UK Financial Services Authority’s national and principles-based approach to regulation can serve as a model for the United States.
7. The imperative to attract and retain professional talent – Today’s workforce demands that agents/brokers and insurers do a much better job of attracting new talent to the industry and providing vibrant careers with an emphasis on continuous learning.
8. Appreciation for the insurance industry – Ealy quoted Willis CEO Joe Plumeri’s statement: “Insurance is the DNA of capitalism. Buildings and homes don’t get built, lives can’t be repaired, products aren’t made, food doesn’t get produced, and services can’t be delivered without it. Insurance is vital to the modern global economy, and navigating these megatrends will increasingly define our success in helping to propel it.”
Source: Willis Group Holdings – www.willis.com