2019 Insurance Industry Outlook: Deloitte Report
2018 has been a healthy year for property-casualty insurers and 2019 is shaping up to be a banner year, but "longer term challenges like the potential for economic slowdown and ongoing disputes over tariffs and trade rules may cast a shadow on the insurance market outlook." That's according to Deloitte's 2019 Insurance Industry Outlook, which you can view online or download a PDF copy. In addition, Sam Friedman offers his Insights on the Insurance Outlook in the Deloitte blog.
Here's a snapshot of Property-Casualty results from the first half of 2018. The report cites this past year's positive factors as sustained economic growth, rising interest rates, and higher investment income.
While positive trends are expected to continue over the short term, the report highlights some of the primary challenges that insurers will face over the next 12-18 months, including technology, talent, regulation, product development, mergers and acquisitions, and tax reform.
Among some of the issues we found noteworthy:
- Insurers will move more core business to the cloud and begin implementing blockchain initiatives into day-to-day activities.
- With low employment expected to continue, employers must get creative about growing the right workforce, particularly in analytics and technology. Jobs will continue to be reshaped, with some tasks offloaded to AI and robotics.
- More creative and proactive approaches to recruitment, retention, and the very notion of the workplace are needed.
- Disruptions in society, the economy, and technology are prompting demand for hybrid coverages, flexible and usage based coverage, and entirely new product lines altogether.
- Sensor-based telematics policies are poised to become a major force in product development, although facing challenges in implementation and privacy.
- Increasing demand for cyber coverage will continue, but expect insurers to write cyber risk with extreme caution because of the unmet challenge in modeling a moving target, as new threat actors and types of attacks keep emerging.
- Continued soft rates could drive larger property-casualty acquisitions to increase market share, diversification, and growth in niche areas.
- As climate change may be tied to the rise in frequency and severity of natural disasters, this appears to be a core issue for insurers, as well as the broader financial sector and economy at large.
- Consumer privacy is an emerging global issue for which insurers need to be prepared or risk suffering serious consequences.