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Representatives of A.M. Best presented a macro view of all the technological advances that will likely have a significant impact on the global insurance industry during “The next 25 years in insurance” webinar organized, at the end of March, by ICMIF – International Cooperative and Mutual Insurance Federation.
Talking about the potential disruption brought by technology, Andrea KEENAN, Senior Managing Director, Industry Relations, A.M. Best exaplained that, contrary to the general belief, “so many Insurtech have technology that is meant to enable insurance company, not disrupt them. Some companies have very clever underwriting techniques and some of them might become carriers themselves. The biggest disruption is happening at the intermediary phase: new underwriting services, new claims services. The insurance companies really have to look into these new technologies and pay attention to the cost savings that their competitors are going to be taking on.”
Regarding the future of agents in the light of technological advancements, “it appears that the good agents, the skilled ones, the ones that nurture clients, that nurture relations, that really offer insights for the policy holders on how to place business in a way that is best for them, I think that they, as long as they are also offering technology solutions and chatbots, having 24 hours accessibility – which is something that technology can offer – I think these agents will survive”, Andrea KEENAN explained.
The new technology developments offer opportunities for the mutual insurance model as well, Andrea KEENAN pointed out. “I really believe in the mutual model and especially in its origins – where it goes with knowing who the customers are. There will be a resurgence of the mutual model”, she added. This will be especially due to the fact that the mutual model resonates with the millennial generation, which is focused on sharing and on causes for the better good.
“Many Insurtech communities are represented by Millennials who work for the public good. Taking into account the ability of insurance to improve people’s lives, if that message is getting through to these communities, there is a lot of potential for the mutual model. If I were a mutual insurance company which hadn’t explored Insurtech yet, I would start looking around at companies partnered with other mutual companies and see that there is a lot of opportunity to personalize insurance”, Andrea KEENAN concluded.
The growth and development of the mutual insurance sector are underlined in ICMIF’s latest Global Mutual Market Share report, which points out that the mutual and cooperative insurance market has been the fastest-growing part of the global insurance industry in the 10-year period since the global financial crisis.
According to ICMIF’s data, in the 10-year period since the onset of the financial crisis (2007 to 2017), premium income of the global mutual and cooperative insurance sector grew by a total of 30% compared to 17% growth of the total global insurance industry. As a result, the global market share of mutual and cooperative insurers rose from 24.0% in 2007 to 26.7% in 2017.
The report highlights 922 million members/policyholders being served by mutual/cooperative insurance companies in 2017, a 13% growth since 2012. The growing positive socio-economic impact of the mutual and cooperative sector was also evident in the increase in the number of people employed by the sector, which reached 1.16 million in 2017 – a 24% growth since 2007.
“In advanced markets, we expected the mutual/co-operative sector to continue with the growth trends seen in the previous 10 years, especially in Europe, the U.S.A. and Canada,” Ben TELFER, Vice-President of Business Intelligence, ICMIF, commented.
“The mutual sector holds a significant share in the majority of these markets, and the strongest-performing mutual/co-operative insurers have successfully differentiated themselves from their competitors and promoted how their mutual structure links to better customer service and the provision of long-term benefits to their key stakeholders”, he added.