The International Cross Border Industry in 35 years from today
In its 35th anniversary year, Bob Pain CEO of AILO reflects on what the insurance sector is likely to look like in another 35 years’ time.
In 35 years, in the unlikely event that I’m still around, I will be 100 years old and classified as an elderly veteran of the industry, and AILO will hopefully be 70 years old and still going strong for the benefit of its membership.
So, what is our industry likely to look like in 2058?
I am confident mergers and acquisitions will have continued apace and led to more large multinational organisations to rival the current giants of today (AIG, AXA, Zurich, Met Life etc). However, if these companies don’t embrace digitalisation and grasp the need to change their focus towards long term and not just short-term returns, they are likely to wither on the vine as many have done before. The bigger question is perhaps whether there remains any place in the future for niche, specialised insurers? On balance, I feel this is less likely going forwards for reasons that relate to capital adequacy levels, the costs of keeping up with the pace of regulatory and technology change, all of which requires deep pockets, and regulators’ preference for big being beautiful not small. At best small companies may partner with the large ones.
Regulation will have become global, which is the mission today of the IAIS (International Association of Insurance Supervisors), and regulators will spend their time tweaking the existing rules rather than create new ones! The playing field will have become more level and regulatory arbitrage largely a thing of the past.
The customer will be king/queen/and every other gender to be politically correct in 2058, and consumer expectations will be extremely high at all stages in the value chain, and of course everything will be possible to manage from their smartphone. Personalisation will be fundamental to any product and proposition e.g., life insurance on demand through seamless digital underwriting. The technology enabling pioneers of today will be at its height, supporting the business including big data, artificial intelligence, predictive analytics, chatbots, and block chain.
With people living much longer, due to improved standards of living and better healthcare, pensions will need to run for longer, be more flexible, and include post retirement care schemes.
With margin pressures companies will need to be ultra-efficient and administration processes will be very different from today, with self-service the go-to option with very little human intervention, if any.
The timeless question is “Is life insurance bought or sold?”. As an ex-salesperson I have always argued that it’s sold for the simple reason that most customers are unaware of their needs for insurance. In 2058 how will that be different? Perhaps compulsory life insurance and pensions supported by governments worldwide faced with an ever-aging population and an under-pressure health system may change this pattern. However, complicated client circumstances are still likely to require the services of super qualified technicians who are available to guide and advise them. If compulsion is not to become a reality, then basic customer needs are still likely to require some form of guidance for advisers or the product providers themselves.
As for the Members of AILO in 2058, I hope that they will be strong, lean and efficient with lightning quick reactions to respond to market changes when required. The chances are that in 35 years’ time, it will be ‘insurance’, but not as you and I know it today, although we perhaps shouldn’t be frightened of the future if we believe in the value of what insurance brings to our customers today.
Every success for the future to you all!
