The effects of the COVID-19 pandemic are big for insurers as well. Think of an increase in the number of damages, for health, credit and business insurance to name a few examples, the impact of the government measures, the pressure on sales because of the reduced business activity, and less direct contact with the client. The latter is definitely an issue in case digitization of distribution channels is not on a certain level.
The increasing economic uncertainty, because of the pandemic, creates pressure at the stock exchanges and for an increase in the credit risk of organisations and individuals, which can lead to a possible default. In combination with the low interest rates this can lead to pressure of solvability and liquidity positions. This all increases the change that supervisors will demand for extra information to determine if insurers could absorb the immediate effects of the pandemic.
All in all, this list with challenges hits a sector, which already had been weighed down by continuing low interest rates and a limited growth in a mature market. This not only applies for the short term, but also for the sustainability of the business models of insurers for the long term. In this respect, the COVID-19 crisis could be an accelerator for sustainable renewal in the sector as well.
PwC wants to help you, and together with you, take care of the negative implications on your organisation by reducing those implications as far as possible and that you will be well positioned for the future. We are there for you and together we can find solutions for your immediate questions and demands.
PwC has put together a multidisciplinary team of experts in the field of business and software development that is able to generate IT solutions to manage business issues.
The future of insurers is determined by agile and digital organisations. InsurTech and digital technology will increasingly become more crucial. New ways of pricing, ongoing cost reduction and market consolidation are other subjects that will strengthen the profitability of insurers.
Cost reduction as strategy
To ensure the future competitiveness in a saturated market, cost reduction will remain a key strategic topic. Even the narrow margins, the low interest rates and the ban on commission for complex products demand a fierce cost policy. How do you ensure that your organisation keeps the costs low for your legacy systems and closed books?
A continuous strategy of cost reduction asks, among other, research for outsourcing, for example your back office, the operation of support departments. Our strategy consultants of Strategy& develop together with you a growth strategy and accompanied operating model where digitisation will be placed.
To reduce complexity in your organisation, we work on simplifying and standardising your organizational structure and your commercial and internal processes. We guide in all aspects of transformations, like adjusting your administration to cloud computing and changing the working culture
‘We have discussions about the dilemmas that insurers face, because we are convinced that critical discussions will help the sector forwards.’