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1、i2024 global insurance outlookInsurers evolving to address changing operating environment and precipitate even greater societal impact Deloitte Center for Financial ServicesEscalating frequency and severity of global risksfrom climate change to cybercrimeis intensifying focus on the insurance indust

2、rys capacity and readiness to react as societys“financial safety nets.”Most insurers are realizing that reacting to risks may not be good enough and are undertaking transformation efforts aimed at preventing losses from happening in the first place.This shift to a more customer-centric business mode

3、l will likely require advanced technology adoption and modification of company culture to helpminimize siloed interactions,enhance collaboration among employees,and increase accessibility of customer databut skill sets may need to be augmented.Merger and acquisition(M&A)activity has been on a declin

4、e since Q2 2022 due mainly to macroeconomic factors.However,as increases in interest rates and inflation ease,pent-up activity may drive an upsurge in deals later in 2023 into 2024.Insurance technology(InsurTech)companies remain front and center of acquisition activity as carriers increasingly look

5、to these capabilities for point solutions across the value chain to power transformation efforts.A fundamental mission underlying much of this change is that the industrys role is pivoting to that of a sustainability ambassador,influencing andpropelling purpose-driven decisions and strategies of cli

6、ents across industries to create a better workplace,marketplace,and society.KEY MESSAGESTable of contents03.Insurers are transforming to achieve customer-centricity and elevate purpose05.Non-life insurance:Evolving to strengthen relationships and profitability08.Life and annuity(L&A)insurers:Core sy

7、stem modernization and culture transformation are underway but more should be done11.Group insurers:Doubling down on digital capabilities,connectivity,and ancillary offerings12.Tech transformation:AI is opening new avenues to enhance and personalize the customer experience15.Human capital:Technology

8、 and culture modernization activate focus on workforce transformation2024 global insurance outlook218.Sustainability,climate,and equity(SC&E):Insurers may look to reform brand perception through ambassadorship21.Finance:Accounting and tax rule changes should spur wider-ranging operational innovation

9、s23.Merger and acquisition(M&A)activity slowing,but insurers should prepare for a potential uptick25.Changing perceptions is the path to the future26.EndnotesTable of contents3Change is accelerating all around us,possi-bly at a faster pace than in any period in history.Shifts in climate,technology,w

10、orkforce,and customer/societal expec-tations combined with macroeconomic and geopolitical volatility are compelling enterprises across the globe to transform their tech infra-structure,products and services,business models,and organizational culture to adapt not just to fuel profit-ability but to re

11、main relevant and survive.The insurance industry is no exception.In fact,these colliding forces could potentially be the catalyst that sparks reinvention both in how the industry conducts its business and in its overall purpose and role in society.Insurers have the potential to achieve even greater

12、social good largely because they already act as societys“finan-cial safety net,”providing a backstop against financial loss for innumerable risks worldwide.However,more insurers are realizing they have a bigger role to play in helping prevent risk,mitigating loss severity,and closing life and non-li

13、fe protection gaps in global markets,espe-cially in the face of the growing number of what appear to be financially unsupportable risks.Existential threats,such as catastrophic climate change,the explosion in cybercrime,and concern over vast uninsured and underinsured populations,are driving many in

14、surers to reimagine how to confront disruptions caused by the changing environment and help consum-ers across all segments prevent or mitigate risks before they occur,rather than merely paying to rebuild and recover after the fact.Even while the most extreme events may appear unavoidable,insurance c

15、ombined with proactive risk management can still help minimize the degree of their impact on affected individuals and communities(figure 1).To achieve this level of transformation,insurance compa-nies may need to adopt new technology,including gener-ative AI,to harvest actionable insights from any n

16、ew data at the industrys disposal.Industry convergence for access to more information sources,products,and services,as well as talent with the skill sets and know-how of emerging capabilities are becoming table stakes.Transformative change will likely have to go beyond adding new tech bells and whis

17、tles.More proactive insurers are also beginning to embrace enterprisewide culture change to reduce silos,elevate their talent,and achieve a more ubiquitous focus on customer-centricity.For global insurers,this may include rethinking how capabilities are shared across geographies and business lines t

18、o help drive a more consistent and integrated customer experience.Insurers are transforming to achieve customer-centricity and elevate purpose2024 global insurance outlook4Leaders should make an ongoing commitment to ensure diversity,equity,and inclusion(DEI),both in their workforce and the customer

19、 demographics they serve.Demonstrating such commitment could help close the trust gap that has often undermined the industrys credibility with key stakeholders,including regulators,legislators,and rating agencies,as well as society at large,and even their own employees.This could not only prove to b

20、e a differentiator in the market,but also help resolve societal issues such as the insurance protection gap.Earning recognition as sound ethical and financial stewards of societal welfare could ultimately empower insurance companies and their distribution force to shift away from a transactional rol

21、e to adopt a broader,more holistic,relationship-based approach to consumer inter-actions.This transformation should not only promote insurers growth prospects but could also fundamentally elevate the perception of the industrys role in protecting and enriching the ever-evolving world.Figure 1Insurer

22、s need to evolve to beter serve industry,society,and the planetSource:Deloite analysis.Build trust and confidence of consumers by being more transparent,responsible,and involved in societal and environmental issuesCreate access and inclusion for all underrepresented and unprotected segmentsUpgrade t

23、he insurance value proposition by placing standard risk-transfer policies at the center of much broader,more holistic risk mitigation programsEnhance brand reputation by enlightening consumers and communities that support is year-round,rather than only at the point of sale,renewal,or when a claim is

24、 filedImprove the botom line by decreasing the frequency and severity of insured events and thereby lower loss ratios 5Non-life insurance:Evolving to strengthen relationships and profitabilityFor the third straight year,the non-life insur-ance sector is boosting top-line growth with higher-than-aver

25、age price increases across nearly all lines of businessyet rising loss costs are making bottom-line profitability elusive for many carriers and the industry as a whole.The one-two punch of elevated inflation and catastrophic events could help fuel transformation in the way the sector interacts with

26、consumers.The US$26.9 billion net underwriting loss for US non-life insurers in 2022 was the biggest since 2011over six times higher than 2021s figure.1 The 14.1%rise in incurred losses and loss adjustment expenses over-came 8.3%growth in earned premiums by a signifi-cant margin,driving net income d

27、own by one-third to US$41.2 billion and pushing the combined ratio into the red at 102.7,up from 99.6 in 2021.2Results for Q1 2023 werent any more encouraging.The US industrys US$7.34 billion consolidated net under-writing loss was the largest in 12 yearsas well as the worst Q1 figure on record.3As

28、a consequence,the US non-life market is“facing the hardest market in a generation”4 as insurers struggle to raise prices fast enough to cover record growth in expenses.The price of single-family residential home construction materials soared 33.9%since the start of the pandemic while contractor serv

29、ices are up 27%.5 Meanwhile,2022 was the eighth consecutive year featur-ing at least 10 US catastrophes,causing over US$1 billion in losses,driving up property-catastrophe reinsurance costs for primary non-life carriers by 30.1%in 2023,which was double the prior years hike of 14.8%.6Reinsurance rate

30、s will likely remain elevated as reinsur-ers retained earnings have been insufficient to bear their cost of capital,let alone build stronger balance sheets to cater to an increasing risk landscape.7 US demand for catastrophe reinsurance alone is expected to grow as much as 15%by 2024,putting further

31、 upward pressure on prices.8Rising insurance rates have reverberated throughout the general economy.Commercial property premiums rose by an average of 20.4%the first time that rates rose greater than 20%since 2001.9 While inflation has been easing somewhat in 2023,commercial insurance rates have con

32、tinued to increase,although at moderating levels except for“outliers”such as property coverage.10 Average price increases for cyber insurance,for exam-ple,were down to 13.3%11a small improvement for buyers over the 15%rise in Q4 2022,and over 20%in Q1 2022.12 Rising expenses are also impacting perso

33、nal lines insur-ers.Auto carriers saw motor vehicle repair costs go up by 20.2%in April 2023 compared to the same period the year before,versus a 15.5%increase in premiums.13 Part of the problem is that while the assisted driving technolo-gies in new vehicles should improve safety while lowering the

34、 frequency and severity of accident losses in the long run,the added complexity of these systems and calibra-tion of their sensors coupled with the impact of inflation can raise repair costs considerably.14 The same trend is evident with the rise in sales of electric vehicles,which are also more exp

35、ensive to repair than their gas-driven coun-terparts.15 Meanwhile,claims for the theft of catalytic converterswhich neutralize environmentally harmful gases in engine exhaust but also attract thieves seeking 2024 global insurance outlook6their valuable metallic componentsexploded from 16,600 in 2020

36、 to 64,701 in 2022.16Rising insurance costs are affecting consumer sentiment and behavior,with 45%of those surveyed between ages 18 and 34 saying theyve thought about going without auto insurance as a resultincluding 17%of respon-dents who say they are already driving uninsured.17 At a minimum,auto

37、insurance shopping and switching rates have reached new highs,18 raising acquisition and reten-tion costs.19Homeowners insurers are also handing down double-digit premium hikes to cover similar repair and replace-ment cost challenges,as well as increasing frequency and severity of weather-related di

38、saster losses,such as those caused by wildfires,windstorms,and floods.20 A number of insurers are either scaling back from or moving out of catastrophe-prone states.21Looking ahead,while further material rate increases in most jurisdictions should support strong premium growth in 2023,uncertainty re

39、lated to catastrophe expe-rience and claims severity patterns may inhibit a near-term return to an underwriting profit.22 US homeowners insurers are expected to post a statutory underwriting loss this year,with a combined ratio of 105,which would be the lines sixth unprofitable 100-plus ratio in the

40、 past seven years.23On a global basis,non-life premiums increased 0.5%in real terms year over year in 2022,far below the 10-year average of 3.6%.24 However,premiums are forecast to improve in both 2023 and 2024 to 1.4%and 1.8%year over year,respectively,mostly due to rate hardening in personal and s

41、ome commercial lines(figure 2).25 Non-life insurer profitability is expected to improve through 2024 as higher interest rates strengthen investment returns,premium rate hardening continues,and expectations for slowing inflation lowers claims severity.26 Figure 2The 202324 forecast for non-life insur

42、ance predicts higher growth in emerging markets compared to advanced marketsSource:Swiss Re Institute,“Sigma:World insurance:Stirred,and not shaken,”July 10,2023.Global non-life insurance premium growth rates in real termsWorld1.4%0.7%0.9%1.8%0.8%2.1%1.5%5.8%6.8%2.4%6.7%5.8%North AmericaAdvanced Eur

43、ope,Middle East,and Africa2024F2023FAdvanced AsiaEmerging Asia(excluding China)China72024 global insurance outlookEven in this environment,where risks are increasingly becoming financially unsupportable,there may be oppor-tunities available for proactive non-life insurers to gener-ate long-term prof

44、itable growth.Insurers should consider going beyond their traditional risk-transfer models and instead become more of a protector of individual poli-cyholders,businesses,and society at large.One area where the industry could face significant disruption is the opportunity and potential threat posed b

45、y the growth in embedded insurance.The concept is not new,but whats changing rapidly is the volume of insurance premiums for major lines likely to be built into other types of third-party transactions,bypassing traditional sellers,such as insurance agents,upending direct-to-consumer sales from insur

46、ers,or even excluding legacy carriers altogether.27 Gross premiums are fore-cast to grow by as much as six times,to US$722 billion by 2030,with China and North America expected to account for around two-thirds of the global market.28Auto insurers are likely to confront the biggest challenge with the

47、 move to embedded coverage.These carriers should,therefore,consider actively seeking alliances before they find themselves without an embedded partner,or figure out how they are going to compete against those who do join forces with a product or service provider.29 This convergence can not only bene

48、fit consumers by way of built-in loss-avoidance and detection capabilities,but can also help carriers play a central role in creating stronger client relationships.The use of parametric insurance is also expanding,where claim triggers and automatic payments are based on an index or specific widespre

49、ad event rather than a particu-lar loss.30 In addition to more coverage being offered for natural disaster losses,new areas covered by parametric policies include cyber exposures and operational down-times due to cloud outages.31 Underserved communities might also benefit from parametric catastrophe

50、 coverage purchased on a group basis for a particular neighbor-hood rather than by individual consumers.32 For exam-ple,in early 2023,A couple of Fiji-based insurers paid out US$50k to 559 smallholder farmers,fishermen,and market vendors in response to cyclones.33The ever-expanding use of AInot just

51、 by insurers but also by their customerspresents its own emerg-ing coverage challenges and opportunities.Munich Re,for example,has launched a policy to cover those implementing self-developed AI programs in their own companies,mitigating potential financial losses from AI underperformance.34 Insurer

52、s can also consider using AI to help clients reduce or mitigate risks.More insurers are also expanding their policy portfolio to cover renewable energy projects,35 including Hiscox,which plans to launch an ESG-focused syndicate at Lloyds to help capitalize on increasing interest and investment in gr

53、een technologies.36 Such sustainabil-ity-focused efforts could go a long way in helping to enhance the industrys brand.A persistent hard cycle,InsurTech innovation that improves underwriting data and capabilities,and rising frequency and severity of catastrophes are just a few of the factors contrib

54、uting to growth in the specialty insurance marketwith projected market-size increases from US$81.5 billion in 2022 to an estimatedUS$130.1 billion in 202737 at a compound annual growth rate of more than 9.6%.Europewas thelargest regionin the specialty insurance market in 2022.38One way or the other,

55、innovation in both operations and products,as well as embracing strategies to drive more frequent client touch points and goodwill could be important components driving non-life insurer growth and profitability.8Due to strong growth in Q1 2022,US life insurance premiums totaled US$15.3 billion for t

56、he year,about equal to the record-high premiums in 2021.39 Despite more than 100 million US adults living with a coverage gap,sales slowed in the second half of the year due to consumer concerns over inflation and the economy,even as worries over COVID-19 declined.40 Globally,the L&A sectors 2023202

57、4 premium growth drivers are projected to fuel a divergence between advanced and emerging markets(figure 3).41 The impact of inflation on discretionary consumer spending will likely pressure individual life insurance sales in the United States and Europe,while regulatory headwinds may weigh on advan

58、ced Asia.42 Conversely,the growing middle class with rising aggregate nominal incomes could power the savings and protection business in emerging markets.43 Across most regions,life insurance growth is expected to be led by rising demand for protection products by younger,digital-savvy consumers who

59、 appear to be increasingly aware of the benefits of term life products.44 On the annuity front,US sales hit a record high in Q1 2023 year over year,despite a 30%decline in variable annuity(VA)transactions,as fixed rate deferred and fixed-indexed annuities increased 47%and 42%,respec-tively,primarily

60、 due to higher interest rates.45 Moreover,second-quarter individual annuity sales increased 12%year over year,surpassing last years record despite an 18%drop in VA sales.46 Weakened financial markets and economic indicators are expected to keep pressuring VAs but will likely continue to benefit sale

61、s of annuities that provide more predictable outcomes.47To better address the business instability often driven by economic,environmental,and societal transitions,many L&A carriers are proactively repositioning for more sustained and predictable growth.Indeed,2024 is poised to be a tipping point for

62、 the sector as the world becomes increasingly digitized and customer and agent expecta-tions for more relevant and holistic product offerings and ease of doing business continue to escalate.Carriers are now considering what should be transformed to meet these demands as well as provide greater cushi

63、on from external market pressures.This shift may be challenging,as many carriers continue to struggle with networks of legacy systems and siloed lines of business,products,processes,and culture.However,these obstacles are not expected to be insurmountable.Like non-life carriers,cutting-edge technolo

64、gy,including digital tools and advanced analytics,could help empower life insurers and their agents to shift away from a transac-tional role to broader relationship-based consumer inter-actions.Modernizing systems can potentially facilitate the use of alternative data sources for faster application

65、underwriting and processing,more seamless cross-selling and customer personalization and ease of engagement,as well as rapid new-product launches.It could also enable better connectivity and collaboration with industry and nonindustry partners across the value chain,both to enhance customer experien

66、ce and drive more sources of profitable growth.Such collaborations could include services for lead generation,as well as ancillary products to provide holistic coverage(wellness,wealth,health,etc.)capabilities.For example,in Asia-Pacific,insurers are investing in technology platforms Life and annuit

67、y(L&A)insurers:Core system modernization and culture transformation are underway but more should be done9and ecosystem partners to improve the customer expe-rience for health and benefits offerings.AIA launched an integrated health strategy across Asia,to simplify customer journeys powered by techno

68、logy solutions,analytics,and a cohesive ecosystem of payers,providers and partners.48 In Singapore,Manulife worked with a large Singaporean bank to provide low-cost,customiz-able protection products across life,health,and wealth to young Singaporeans.49 However,modernizing systems is not without its

69、 chal-lenges.Although most respondents to a recent Deloitte survey of 100 US L&A chief information officers or their equivalents said they have begun their core system modernization journey,fewer than one-third have completed some(20%)or all(12%)of their initiatives.50 Just over two-thirds have proj

70、ects currently underway or in the planning stage.51 Figure 3The 202324 growth forecast for life insurance is diferent for advanced and emerging marketsSource:Swiss Re Institute,“Sigma:World insurance:Stirred,and not shaken,”July 10,2023.Global life insurance premium growth rates in real termsWorld0.

71、7%-0.2%-0.8%1.5%-1.3%1.2%-0.1%6.9%4.0%1.6%6.7%4.7%North AmericaAdvanced Europe,Middle East,and Africa2024F2023FAdvanced AsiaEmerging Asia(excluding China)China2024 global insurance outlook10Moreover,in the last five years,the percentage of L&A carriers intending to upgrade or enhance rather than rep

72、lace their existing legacy core systems has doubled from 36%52 in 2017 to 73%in 2022.53 While there seems to be agreement that eliminating legacy systems may be too onerous and costly to undertake,carriers can explore a variety of alternative core-system enhancement strat-egies to achieve their goal

73、s.For example,most of those surveyed(89%)intend to employ InsurTechs as a primary solution for one or more points in the L&A value chain.54 Lincoln Financial Group worked with Modern Life to meet an increased demand for more digitization in the insurance buying experi-ence.55 Munich Reworked with Pa

74、perless Solutions Group(PSG)to offer a combined risk assessment and e-application product that allows life insurance carriers to underwrite new policies faster and more accurately.56Most respondents also say they will use cloud capabil-ities for new solutions related to core modernization.This solut

75、ion can enable business continuity and poten-tially offers easier scalability,greater agility,lower IT operating costs,and increased security.Socotra is one example of a cloud-native core platform that enables insurers to more rapidly develop and deploy new life insurance products.57Adding technolog

76、y capabilities can also potentially lead to increased opportunities to connect more effectively and efficiently with enormous underpenetrated global life insurance markets.The SRI mortality resilience index indicates that more than 50%of the worlds financial needs remain unprotected in the event of

77、the death of the financial head of the household58 and emerging econo-mies account for most of that gap.59 One key strategy to increasing penetration in underserved markets may be adopting digital capabilities to more effectively enable partnerships.Catalyst Funds portfolio company Turaco was able t

78、o reach over 70,000 gig-economy work-ers in Kenya and Uganda by offering life and health insurance coverage through partnerships with digital ride-hailing platforms.60 While Deloittes survey found systems enhancements are already underway or in the planning stage for many L&A carriers,61 the results

79、 may be underwhelming or unsuccessful without corresponding culture transfor-mation.For example,76%of carriers surveyed want to enable better integration between IT and business units.62 To help achieve more cohesion,they should consider developing a value-stream orientation that could more seamless

80、ly enable end-to-end delivery of business initia-tives.This operating model could require a shift to decentralizationcreating cross-functional teams to help minimize friction points between business units and functions looking to achieve a specific business goal.Such a paradigm can help align busine

81、ss capabilities,relevant systems,and information flow to potentially alter long-standing company culture by breaking down the barriers posed by siloed thinking and fostering more customer-oriented focus.From an M&A lens,private equity(PE)firms will likely continue to look to the L&A sector despite t

82、he recent decline in activitylargely due to fewer entities to target as interest rates surge.Private capital is playing an increas-ing role in the insurance market as PE firms seek access to insurers huge asset pools,and insurers tap into PE asset management skills to help boost returns.6311Group in

83、surers:Doubling down on digital capabilities,connectivity,and ancillary offeringsUS employee benefit buying habits continue to be impacted by the pandemic,particularly regarding enrollment decisions for products such as life insur-ance and supplemental health products.64 In fact,in 2022,new premiums

84、 for coverage for accident,criti-cal illness,cancer care,and hospital indemnity jumped 12%to US$2.9 billion year over year.65 New workplace life insurance premiums fell 1%from 2021 to US$3.9 billionalthough this is likely because it was compared to the 14%increase in 2021,which was one of the larg-e

85、st gains in 30 years.66As the pandemics impact begins to fade,Deloitte expects that the anticipated overall market growth rate for group insurers over the next few years will likely trend mostly in line with the direction of the economy,employment,andwages.Providers that want to grow in excess of th

86、e overall market may be challenged to expand product portfolios,including voluntary offerings that can potentially add premium and generate higher margins.Forty-five percent of employees surveyed agree they are extremely likely or likely to participate in more voluntary benefits offered through thei

87、r employer(e.g.,critical illness,accident,disability,hospital indemnity,supplemental life,etc.)in 2023,up from 38%in November 2021.67Moreover,as awareness of long-term care costs grow,consumers are looking to their employee benefits for coverage.68 The additional awareness of long-term care has in p

88、art been driven by the Washington Cares Fund,which mandates long-term care insurance for all employ-ees in the state of Washington as of July 2026,supported by employee-paid premiums.69 This coverage provides access to a total balance of up to US$36,500(adjusted annually for inflation)for eligible c

89、onsumers.70 Similar initiatives have been advanced in about a dozen states.71 A growing number of employers are also offering their workers hybrid solutions that bundle life insurance with long-term care as a voluntary or employee-paid benefit,and more than a handful of carriers are active in the se

90、gment,includingAllstate andChubb.72Group insurers are also seeking avenues to increase client engagement and add value to differentiate their brand.One trendlikely exacerbated by the pandemic and the“great resignation”is increased consumer demand for employee benefits focused on financial health and

91、 well-being.Providers and brokers can consider working with InsurTechs to potentially help businesses benefit from healthier and more motivated employees,and at the same time,encourage more frequent touch points in customer relationships.For example,YuLife,a London-based InsurTech is launching its h

92、olistic employee benefits and well-being platform in the United States,harnessing behavioral science and game mechanics to encourage workers to make proactive lifestyle changes while also priori-tizing prevention by derisking individuals through healthy activities.73 Providers,benefits brokers,and e

93、mployers who make such offerings accessible to employees can potentially turn financial products into a force for good by inspiring people to improve their mental,physical,and financial well-being in a holistic and engaging way.Group insurers are also seeking more innovative ways to improve client e

94、xperiences on digital portals while enabling self-service capabilities.As the race to 2024 global insurance outlook12ubiquitous digitization continues,HR organizations across industries should be endeavoring to keep pace in a competitive labor market.Expectations for cutting-edge innovation around b

95、enefits administration systems to enable seamless movement of employee data between providers and employers is no longer likely to be nice-to-have functionality.One way to help deliver a more efficient and effective digital experience to HR organizations with disparate systems might be to build an a

96、pplication programming interface(API)connection from the provider system into the employers benefit administration platform.Instead of downloading data and passing it back and forth between insurers and employers,the carrier can connect directly into the employer source systems through APIs.APIs can

97、 connect to a variety of employee benefits systems for scalability and flexibility.With expense reduction top of mind for many due to concerns about a possible economic downturn later this year into 2024,74 insurers should be considering elements,such as expected return on investment and which use c

98、ases competitors are focusing on,to stra-tegically prioritize which of their customers employee benefit administrative platforms to connect to and the use cases that can be most impactful.These use cases may include capabilities such as real-time benefits enrollment,benefits eligibility checks,proce

99、sses to drive specific prod-uct purchases,billing,employee updates,and employee verification of eligibility prior to claims payment.Employees are putting higher value on their benefits and related experiences,challenging employers and providers to create improved customer experiences through broader

100、 product offerings and digital portals and services,potentially opening the door for year-round benefits engagement.Tech transformation:AI is opening new avenues to enhance and personalize the customer experienceThe evolving operating environment should put even more pressure on insurers across sect

101、ors to increase the use of automation,AI,advanced analytics,and core transfor-mation in the year ahead.These capabil-ities could be the foundation for insurers to adapt to the complexities of the quickly changing environment and elevate their purpose.Advanced technology capabilities can help achieve

102、 operational targets such as improved underwriting for more accurate pricing and risk selection,bolstering claims management to limit loss costs,and improving efficiency by streamlining operations.They could also advance longer-term goals such as proactively help-ing clients mitigate or eliminate ri

103、sks before they even occur,promoting personalized coverage and services to 13strengthen customer relationships,and making outreach to underserved segments more efficient and effective.Although digital transformation has topped insurer agendas for several years,consumers still yearn for digital servi

104、ces,interfaces,and experiences that are comparable to those provided by noninsurers such as e-commerce giants.Legacy constraints,such as old mainframe-based systems,multiple core platforms,integration complexity,and ineffective data flows still often impede experience optimization,even as more data

105、and systems are moved to cloud platforms.To help make this shift more impact-ful,insurers can consider making customer interfaces more engaging and intuitive by strengthening their digi-tal engagement layer with technologies such as AI and advanced analytics to elevate the customer experience.AIs or

106、iginal promise was to improve employee produc-tivity,speed up decision-making,and reduce costs,however it could also be a significant disruptor to customer experience.Coupling AI with advanced analyt-ics can potentially provide a more complete,real-time picture of insurance customers,including their

107、 actions and sentiments.Such insights can be leveraged to target customers with offers,advice,or services most relevant to them at moments that matter most to them.For example,HDFC ERGO,an Indian non-life insurer has been using AI to offer hyperpersonalized experiences to its custom-ers,including cu

108、stomer onboarding,issue resolution,and claims handling.75Personalization may bridge the gap between current levels of insurance customer experience and desired e-tail-like experiences(figure 4).Figure 4AI and advanced analytics can help ofer beter personalized services and enhance customer experienc

109、e Source:Deloite Identify target customers and predict propensity to buy Create customized ofers and campaignsServicing Provide more sophisticated chat experiences Scale contact center AI Call topic modelingRelationship expansion Recommend next best ofers Value through an ecosystem of partners Empow

110、er agents and brokers with tools to strengthen customer relationshipsRetention Sense early signals for customer atrition Be proactive with retention tactics2024 global insurance outlook14Insurers can also use AI and advanced analytics capabili-ties to analyze Internet of Things(IoT)data to help bett

111、er identify potential disasters before they happen and nudge policyholders to take corrective and preventive actions.Hartford Steam Boiler,for example,has launched Sensor Solutions,which employs a number of hardware sensors to detect elements like temperature changes and presence of water via an app

112、 for remote oversight,sending alerts to prevent loss events.76Insurers are also seeking practical applications for how they can take advantage of generative AI,to help drive efficiency and customer-centricity.Many are identify-ing and validating use cases that could apply across the insurance value

113、chain using these capabilities,with employee experience and workforce productivity already emerging as the most prominent areas of interest.77 AXA recently announced the release of an in-housedevel-oped generative AI tool to 1,000 employees and plans an enterprisewide rollout in a few months.78 AI c

114、an also be used by insurers to fine-tune large language models(LLMs79)for specific roles and tasks within insurance organizations.For example,models can be trained to function as actuaries,underwriters,claims adjusters,and customer service representatives.However,given regulatory concerns as well as

115、 questions about the reliability of AI-generated material and deci-sions,insurers should be carefully vetting how much to delegate to this new technology and determine where human judgement may be necessary,especially in terms of quality control oversight.Moreover,insurers AI and analytics capabilit

116、ies are likely only as strong as the underlying data sources supplying it.To generate faster and better insights,insurers could eliminate silos that can cause a myopic understanding of the customer and modernize their data capabilities with an enterprise view.This may include enhanced master data ma

117、nagement,integrating,managing,governing,and using both company data and large unstructured data sets and third-party data.Innovation using capabilities such as AI,advanced analytics,and IoT may not always come from within the organizations four walls.Insurers may obtain these capabilities externally

118、 from third-party vendorsfrom startup InsurTechs to large technology firms.For exam-ple,UK-based Send launched a generative AIbased commercial and specialty underwriting solution to help speed up underwriting by automated extraction of infor-mation from unstructured data sets.80Insurers should also

119、be cognizant that with advance-ments in AI technology,they are likely to have more capabilities than what might be permitted within the realm of local and global privacy and consumer protec-tion laws.Therefore,AI and generative AI implemen-tations should include collaboration with the chief risk off

120、icer and chief compliance officer to identify possible problem areas and establish guardrails to meet gover-nance standards on how these technologies can be used.Given the pace of development of AI and generative AI technology,regulators may find it hard to keep up.The 152024 global insurance outloo

121、kHuman capital:Technology and culture modernization activate focus on workforce transformation While technology is the vessel needed to move data quickly and seamlessly throughout the value chain,the human capital aspect is potentially even more elemental to a carriers success.Insurers seem to be re

122、cognizing that rapidly evolving dynamics impacting the industry could require workforce transformation.There is an increasing realization among carriers that the way talent is accessed,engaged,and developed should be based on where carriers want their organizations to go in the future,not the way th

123、ings have typically been done84(figure 5).As discussed in the L&A section,the siloed architec-ture that tends to permeate throughout the industry including infrastructure and workersshould be trans-formed to help break bottlenecks and increase the speed European Union has taken the lead in paving th

124、e way for regulators around the world with a global regulatory framework for use and development of the technology.81 However,insurers responsibility lies in ensuring that its use and development should be driven not only through profitability lens,but also with an emphasis on ethics and trust,gover

125、ned by corporate values.AI,especially generative AI,could also empower bad actors,from hackers to insurance fraud perpetrators.Cyberattacks using LLMs are already materializing.82 Using generative AI,even novice bad actors can write elaborate malware codes or believable phishing emails impersonating

126、 insurance companies or even government agencies.For example,perpetrators of synthetic identity fraud,in which cybercriminals create new identities with stolen or fabricated data can use gen AI to impersonate others by creating images and videos in someone elses likeness.83 This can pose significant

127、 threats both to insur-ance policyholders and employees.Insurers should be updating their enterprise risk management protocols as well as accelerating employee awareness and training programs to minimize emerging threats.Technology advancements could be a huge impetus to elevating the industrys visi

128、on and mission.Insurers should transform their conservative mindsets and embrace emerging technology capabilities that can help increase focus on societal and environmental impacts as well as profits.16and agility associated with customer-centric models.What this means for the workforce is that busi

129、ness units and functions such as underwriting,portfolio invest-ment,and claims management may no longer act inde-pendently,but instead adopt a skills-based approach enabled by the shift from employee-based models to workforce ecosystems.The construct involves understanding employee compe-tencies by

130、role,function,and level,notwithstanding where they reside in the company,and leveraging them across business lines and functions,potentially breaking down silos and driving more impactful collaboration.This might also entail finding or developing new skills to harness digital tools while driving ele

131、vated experiences and outcomes for workers,customers,the business,and society at large.Recognizing the impact to the workforce that may ensue from long-term growth strategies,many insurers are elevating the role of the chief strategy officers to work in conjunction with the chief human resource offi

132、cer and other talent leaders.This could help ensure that shifts in the long-term strategic vision can be embedded in change management messages and are in sync with the employee value proposition.Moreover,as insurers ramp up their technology architec-ture,many are looking to elevate the depth and br

133、eadth of technology skills in their workforce.This can augment skills requirements for underwriting,actuarial science,and predictive modeling positions,further intensifying competition both within and outside the industry.Figure 5Changes to long-standing workforce models will likely be keySource:Del

134、oite a skills-based approach to transform siloed architecture(both infrastructure and employees)Elevate the role of chief strategy ofcer(CSO)to work in conjunction with chief human resources ofcer(CHRO)and talent leaders to seamlessly address the impact of strategic initiatives with employeesElevate

135、 the depth and breadth of technology skills in the insurance workforceBoost industry and brand appeal to atract more tech-savvy job candidates and improve employee fidelity172024 global insurance outlookUntil now,this has often been a struggle,as a career in insurance may not be perceived to be as e

136、nticing a career destination as other FSI sectors or technology compa-nies.But several dynamics are unfolding both within and outside the industry that may generate greater appeal to more tech-savvy job candidates.The potential shift in direction for many in the industry creates an opportunity for i

137、nsurers to demonstrate how they lead with a more purpose-driven value proposition to attract the right talent.Carriers may need to exhibit not only how they are embracing cutting-edge technol-ogy,but the benefits of building a career in an industry whose purpose is not only profitability,but also to

138、 make a positive impact on society,helping the world thrive by standing behind other industries to allow for greater innovation,productivity enhancements,and calculated risk-taking.At the same time,the fallout from over 300,000 layoffs in technology companies in the first half of 202385 created a ta

139、lent pool that may be looking for a more stable working environment.This talent pool could also include InsurTech employees being let go as startups battle economic uncertainty and a period of transition.86 It will likely be incumbent upon insurers to consider those with no or less industry experien

140、ce to broaden the potential candidate pool,which may also add new levels of diverse thinking to the workforce.In addition,the adoption of new technology may not only transform the industrys appeal from“antiquated”to cutting-edge but may also provide employees with increased opportunities to focus on

141、 more meaning-ful,purposeful,higher-value work.Indeed,many new technologies dont just augment human workers,they can make work better for humans and humans better at work.87 In fact,it is estimated that AI and machine learning will increase labor productivity about 37%by 202588 by eliminating or min

142、imizing more manual tasks and freeing up current workers to add more value.This will likely require reskilling and upskilling,which should appeal not just to the current workforce,89 but also job candidates looking for a career they can grow in.Moreover,technologies such as generative AI can provide

143、 nudges to the client-facing workforce to portray greater empathy90 or signal potential customer attrition/coverage lapse91 before it happens,which could boost goodwill and stronger relationships between the workforce and the client base.Amid these changes to technology and operating models,carriers

144、 should remain focused on adapting to become a brand that employees are excited and proud to be part of,because its likely that employees will be more passionate and productive when they believe in their companys mission.92“With company culture as the center of gravity,providing a unique employee ex

145、perience must focus on career development,purpose,flexibility,well-being,social,and environmental goals.The importance of human interaction has increased post pandemic,and we aim to harness smart working in a hybrid setup,enabled through team agreements that support individual and team needs.Going f

146、orward,how we leverage the tech-nology advancements to innovate and further elevate the experiences and outcomes for our people and customers will be the key.”Taeko Kawano,chief human resources officer,AXA Holdings Japan Insurance,during an inter-view with Deloitte Center for Financial Services cond

147、ucted on August 3,2023.18SC&E,as a concept,is not new to the insurance industry.What is changing are the escalating stakeholder demands and evolving avatars of risksfrom the frequency and severity of natural disasters to financial and reputational ramifications from their unique position as investor

148、s and underwriters.As regulatory bodies around the globe enhance disclosure expectations,insurers are pivoting to more impactfully incorporate SC&E into their corporate strategy and DNA.93 However,evolving into stewards of purpose may require internal enhancements both verti-cally and horizontally a

149、cross insurance organizations.In addition to escalating their own decarbonization goals,insurers should assist clients transition to net-zeroHaving experience assessing and managing risk,insurers may be well-situated to position themselves as sustain-ability ambassadorsclearly communicating risks an

150、d opportunities and influencing executives decisions and strategies across industries to create a better workplace,marketplace,and societal impact.While the insurance industrys scope 1 and 2 carbon emissions from their own operations are rather low(10%to 25%of total emissions)94 carbon abatement can

151、 potentially be further improved through occupying greener buildings and vehicles,as well as waste manage-ment program enhancements.The industrys scope 3 emissions(75%to 90%of total emissions)95 may require reevaluation of underwriting and investment portfolios.Several European insurers are already

152、working to elevate the importance of sustain-ability throughout their underwriting and investment portfolio determinations.96 For example,global insurer Chubb launched a packaged insurance solution in the United Kingdom to support the growth of small and medium alternative and renewable energy proje

153、cts with a planned global rollout.97 As investors and underwriters,in addition to balancing their own asset liability portfolio to prepare for potential devaluation of fossil fuel-based assets,many insurers are also guiding clients as they develop their decarbon-ization commitments.However,these dec

154、isions are not without obstacles.This year,many large global carriers with significant US operations and membership in the Net Zero Insurance Alliance(NZIA)faced backlash from US lawyers citing potential legal concerns over their decarbonization agen-das.98 Pursuing decarbonization objectives collec

155、tively could create material antitrust risks,resulting in a series of carrier withdrawals.This might ultimately lead to the disintegration of the NZIA.Whether companies decide to partner with industry groups or proceed individually,their intent and actions around climate pledges,social equity initia

156、tives and reporting should be transparent.Indeed,stakeholders including regulators,investors,employees,customers,and litigators are keeping close tabs on probable acts of greenwashing,where some companies might resort to selective disclosure and filtered focus.Moreover,regulators have a growing expe

157、ctation from the insurance industry to finance the transition to net-zero from now till 2050.Annual public climate finance flows estimated at US$1.25 trillion are expected to cover only 25%of the funding requirement.99 There Sustainability,climate,and equity(SC&E):Insurers may look to reform brand p

158、erception through ambassadorship19Figure 6Respondents cited stakeholder demands,reputational risk,and legal costs as the top challenges in managing climate risk governance tasksSource:Deloite analysis.Stakeholder demandsReputational riskLegal costsLack of metrics/key performance indicatorsLack of un

159、iform reporting standardsData qualityData availabilityBuy-in from business/functional leadersShortage of talentSkill gapInsufcient fundingLow climate risk understanding48%44%41%39%36%35%32%28%20%20%15%6%2024 global insurance outlook20is a need to mobilize annual private climate finance flows of at l

160、east US$3.75 trillion to cover the 75%gap.100 Financing for a sustainable economy likely requires a strong public-private partnership that can help close the funding gap.For example,a group of 11 private insurers are providing reinsurance to facilitate the largest debt conversion for marine conserva

161、tion of the Galpagos Islands.This can help Ecuador save more than US$1.126 billion in reduced debt service costs.It is expected to generate US$323 million for marine conservation in the Galpagos Islands over the next 18.5 years,highlighting the impact sustainable finance solutions can have in addres

162、sing the funding gap for biodiversity conservation.101Governance framework could require restructuring to sensitize and align people,and set enterprisewide controls and processes A Deloitte survey of US sustainability executive-level insurance respondents revealed several large obsta-cles to adheren

163、ce of climate risk governancerelated tasks(figure 6).102Regulators are already working on defining metrics for insured emissions calculations.The International Sustainability Standards Board(ISSB)issued its inaugu-ral IFRS S1 and S2 disclosure standards.Europe intro-duced target-setting protocols an

164、d Canadas Office of the Superintendent of Financial Services finalized climate risk management guidelines.In the United States,the Securities and Exchange Commission is framing guide-lines for emission reporting,and further developments from regulators along with development of federal and state req

165、uirements for the insurance industry through 2024 are anticipated.While there is more clarity on the accounting treatment of financed emissions for insur-ance companies,going forward,further transparency on underwriting emissions is expected.As regulators and other stakeholders seek more infor-matio

166、n,the scope of data collection,measurement,and reporting work is expected to increase significantly.Most insurers should reconstitute an overarching SC&E gover-nance strategy to help facilitate more effective controls,improve stakeholder management,and achieve greater sustainability across the funct

167、ions and lines of business.103 The cost of SC&E compliance may also need to be considered,particularly in the current operating envi-ronment.Rather than instituting separate initiatives,insurers can find efficiencies in compliance by working in tandem with data warehousing and reporting initia-tives

168、,like data or finance transformation.In many cases,SC&E compliance and reporting rolls into the finance organization,so it may be a natural path to reducing the cost of compliance.Social equity demands broader product and service outreach and increased representation on executive leadership and the

169、board Societal and corporate commitment to DEI increased rapidly in 2020 following the death of George Floyd.104 Insurers responded by initiating DEI-specific goals,benchmarking,training,and recruitment.There are still challenges within the industry based on interviews by Marsh McLennan and the Nati

170、onal African American Insurance Associations(NAAIA)of 650+Black/African American risk and insurance profession-als.105 The interviews revealed that 84%of the respon-dents still face challenges in advancing their careers due to conscious or unconscious racial bias.Respondents cited lack of promotions

171、(75%),growth opportunities(70%),and mentorship(68%)as their primary concerns,which may be a major challenge with retention.106 Going forward,it is important for insurers to go beyond“treating DEI as an initiative”and take steps to develop an inclusive ecosystem that provides a sense of belonging.Imp

172、roving their own internal diversity and inclusion in management,executive leadership,and the board can amplify growth opportunities for diverse groups.Evidence suggests that for each woman added to the C-suite,there was a positive,quantifiable impact on the number of women in senior leadership level

173、s just below the C-suite.107 Some actionable steps may include estab-lishing network groups and conducting learning and development programs on unconscious bias,allyship,and inclusive leadership.Insurers should also consider advancing their finan-cial inclusion initiatives with more suitable offerin

174、gs in products and services when considering social goals.For example,a study by the Wharton Climate Center 21Finance:Accounting and tax rule changes should spur wider-ranging operational innovations While technology and culture trans-formations are in various stages of development throughout the in

175、surance industry,most carriers have transformed their finance systems to meet the January 1,2023 effective date for new accounting rules for report-ing on long-term insurance and annuity contracts.111 US publicly held companies are now operating under revamped Long-Duration Targeted Improvements(LDT

176、I)rules,following a parallel path to similar global regulations laid down under International Financial Reporting Standard 17(IFRS 17)by the International Accounting Standards Board,effective for both L&A and non-life carriers.112 More than half of respondents(57%)to a December 2022 survey of insura

177、nce executives for Deloitte Global by Economist Impact said IFRS 17s benefits would outweigh its costsup from 40%in a 2018 survey and 21%in 2013citing a positive impact on claims management,underwriting,and pricing,as well as oper-ating model changes other than finance or actuarial.113 However,many

178、insurers may still have more work to do,including how to communicate the context and meaning of financial results under the new accounting standards to external stakeholders,such as equity analysts,rating agencies,and institutional investors.Insurers should also be looking to capitalize on potential

179、 benefits outside of the finance function,such as long-term forecasting for expenses and budget needs.Moreover,going forward,IFRS17 and LDTI may have an impact on product choices,given that the new standard offers more clarity on profitability by product.In addition,in the United States,while the ne

180、w LDTI rules for the moment only apply to publicly traded insurers,privately held and mutual companies must also comply by 2025.114 Such carriers could bene-fit from lessons learned by public companies in their IFRS/LDTI implementations.found low-to moderate-income households and communities of colo

181、r lack adequate insurance cover-age against climate-related disasters.108 Insurers may consider increasing coverage reach and affordability for unserved or underserved segments and regions,work-ing with governments and other industries to provide better access to long-term savings and health insuran

182、ce,and diversifying their workforce to better serve various demographics in the population.International governing bodies like the World Economic Forum suggest reporting the percentage of employ-ees per category by age group,ethnicity,gender,and other diversity indicators and talent benchmarks.109 T

183、he SEC has also established several“human capi-tal”disclosure requirements,with more under discus-sion.110 However,insurers should subscribe to the idea that its not only about compliance,its about excellent corporate citizenship.2024 global insurance outlook22Whats next for insurance tax leaders?In

184、surance tax departments with multinational operations should be monitoring legislative developments and plan-ning for the anticipated tax impact of the Organisation for Economic Cooperation and Developments Pillar 2,which introduces a global minimum tax,by jurisdiction,based on book income with a nu

185、mber of adjustments.Several jurisdictions have already approved/passed legis-lation and many others have released draft legislation and taken other steps toward adoption of Pillar 2.115 Insurance tax departments should be proactive and invest early to become familiar with the rules,model tax impacts

186、,as well as think about potential planning and/or restructuring that could help to mitigate adverse tax impacts.Insurance tax departments should also under-stand the data requirements for proper implementation of the new rules and associated reporting.Given the complexity and significance of these c

187、oordinated world-wide changes,reliable tax models call for the aggregation of new and detailed data,much of which may not be currently collected and readily available.The United States has not drafted legislation specifically related to Pillar 2.116 However,US-based multinationals and foreign-owned

188、US companies are expected to be subject to Pillar 2,in various forms,regardless of US legislation.117 As such,US insurance tax departments should monitor legislative developments(both in the United States and in other jurisdictions)and plan for Pillar 2 and potential future legislation in the United

189、 States.Insurance tax departments should also be assess-ing whether the new book-minimum tax may apply to their business.The book-minimum tax is a 15%minimum tax,effective for taxable years beginning after December 31,2022,which is targeted at corpo-rations with substantial book income(i.e.,those wi

190、th average annual adjusted financial statement income of over US$1 billion either individually or with a group of related companies).118 In addition,insurance tax departments should remain close to their business and investment units,so they are prepared to respond to changing marketplace land-scape

191、s.For instance,insurers should be closely moni-toring changes in interest rates and the tax department should be involved in discussions related to things like investment planning and hedging strategies so that the tax impacts can be properly understood and estimated prior to executing trades.232024

192、 global insurance outlookMerger and acquisition (M&A)activity slowing,but insurers should prepare for a potential uptickGlobally,449 M&A deals in the insurance sector were completed in 2022the highest in a decadeup from 419 in 2021.119 However,activity fell from 242 deals in the first half of the ye

193、ar to 207 in the second,as inflation and interest rates continued to rise.120 While the macroeconomic environment in North America and Europe seems to be impeding activity in the near term,Asia-Pacific deals increased from 42 to 60 transactions year over year,with a 22%increase in the second half of

194、 2022.121 Going forward,economists indicate that the worst of the economic downturn is likely past in most parts of the world122 and while M&A activity is expected to increase,the volume may decline from the highs of the past several years.123From a global deal perspective,several insurers in the Un

195、ited States and Europe are exiting more mature markets and exploring entrance into higher potential growth regions,such as emerging Asia-Pacific,given relatively low insurance penetration rates compared to more developed countries.For example,Chubb acquired Cignas accident,health,and life businesses

196、 in South Korea,Taiwan,New Zealand,Thailand,Hong Kong,and Indonesia,with a value of US$5.36 billion.124In the United States,the L&A sectors activity fell 33%to 16 transactions with an aggregate value of US$160 million in 2022,from 24 transactions totaling US$24.5 billion in 2021.125 While there was

197、high demand for acquisitions,supply was minimal due to interest rate hikes.The upward trajectory of interest rates will also likely continue to inhibit PE activity in the sector.PE firms seek to access L&A carrier balance sheets as a source of permanent capital.126 If rate hikes and inflation cool t

198、oward the latter part of 2023 and into 2024,PE firms may reenter the market with pent-up demand and begin aggressively seeking deals,127 with a likely focus on distribution networks and finding synergies.128 Life insurers could be open to deals to transform their balance sheets.As drivers of synthet

199、ic profitability diminish and hedging risk increases,there may be an increase in activ-ity either through reinsurance transactions or sales of closed blocks of business.129US P&C activity slowed in 2022,with 38 deals at total aggregate value of US$13.5 billion compared to 43 deals announced with tot

200、al aggregate value of US$22.0 billion in 2021.The cost of inflation on claims continues to drive up combined ratios,fueling expectations for a prolonged hard market.This will likely diminish deal activity in the near term,with the exception of carriers looking to move into new markets or refocus on

201、core business competencies.For example,in May 2023,AIG announced an agreement to sell Crop Risk Services to American Financial Group Inc.for US$240 million.130 AIG also sold Validus to RenRe in May for nearly US$3 billion,in an effort to continue its portfolio reposition-ing.131 Moreover,in July 202

202、2,Lemonade purchased Metromile,accelerating the formers entry into the auto space.13224Insurance broker M&A in the United States and Canada declined 24%to 359 deals in the first half of 2023 compared to the same period in 2022.133 The decrease maintained a pattern that began in the second half of 20

203、22,when some of the sectors most active purchasers activity slowed dramatically from increases in the cost of capital.134 In the near term,the global InsurTech market may see more activity.Since the stock-market downturn in 2022,there was a sharp decline in InsurTech valuations and potential IPOs.13

204、5 Therefore,investors and founders may seek alternative solutions for growth,such as acquisitions to build scale,which could lead to consolidation in the sector.For example,Zinnia,an L&A insurance technol-ogy and digital services company,announced the acqui-sition of Policygenius,a digital insurance

205、 marketplace,on April 25,2023,to create a tech-focused platform covering the full insurance life cycle.136Looking ahead to 2024,there are several triggers that may signal a rise in M&A activity:A shift in macroeconomic indicators such as lowerinterest rates and inflation could impede organicgrowth,d

206、riving more M&A.Carriers seeking digital modernization will likelyincreasingly align with InsurTechs for the entiretyof the customer journey,rather than just pointsolutions.Many venture funds will enter a period of exits andevergreen creation,as this cycle appears overdueapproaching 2024.With increa

207、sing focus on expense reduction,insur-ers could look to consolidate their operations andstreamline processes by divesting noncore business.As these elements unfold,insurers should be hyperfo-cused on benefiting from any possible synergies,partic-ularly for carriers looking to increase scale with M&A

208、 activity,especially in a recovering economy.While merg-ing organizations infrastructure generally requires capital investment,it will likely accelerate the elimination of unnecessary expenses by avoiding the need for redundant resources once the companies are on a single platform.Insurers can also

209、consider updating a potential target list for acquisitions according to their stated growth strategies.They can work with their corporate devel-opment and trusted advisors to expose opportunities for shedding unprofitable or noncore businesses.In a quiet M&A market setting,getting your ducks in a ro

210、w in anticipation of a potential uptick in activity is often the differentiator on which carrier gets to close the deal.252024 global insurance outlookChanging perceptions is the path to the futureWhile the insurance industry has consistently made a posi-tive contribution to society by distributing

211、risk to help reduce financial uncertainty and make accidental loss manageable,there often remains a mismatch with societys perception of its mission.However,the industry is at the precipice of consider-able transformation going into 2024,gearing up to augment its overall mission to the benefit of em

212、ployees,society,and even our planet.This may be the formerly elusive game-changing moment that elevates the role and understanding of the insurer in the lives of their clients and communities.26Endnotes1.American Property Casualty Insurance Association,“Underwriting losses soar net income shrinks fo

213、r P&C insurersin 2022,”press release,March 28,2023.2.Ibid.3.Tim Zawacki,“US P&C industry posts largest-on-record Q1statutory underwriting loss,”S&P Global Market Intelligence,May 19,2023.4.Nicole Mahrt-Ganley,“US P&C insurers facing hardest marketin a generation,”American Property Casualty Insurance

214、Association,March 27,2023.5.Ibid.6.Ibid.7.Mohit Pande and Mike Mitchell,The state of the reinsuranceproperty-catastrophe market,Swiss Re Group,May 16,2023.8.Ibid.9.Council of Insurance Agents&Brokers,“Q1 2023 P/C marketsurvey,”press release,accessed September 6,2023.10.Ibid.11.Saumya Jain,“US commer

215、cial insurance rates steady in Q2:MarketScout,”Reinsurance News,July 10,2023.12.Ibid.13.US Bureau of Labor Statistics,“Table 2.Consumer price indexfor all urban consumers(CPI-U):US city average,by detailedexpenditure category,”press release,accessedSeptember 6,2023.14.AAA,“ADAS sensor calibration in

216、creases repair costs,”accessed September 6,2023.15.Jim Henry,“Repairing an electric vehicle could cost more thangasoline cars:A new kind of sticker shock,”Forbes,July 25,2022.16.National Insurance Crime Bureau,“Catalytic converter theftssurge nationwide,”press release,May 10,2023.17.Andrew Hurst,“40

217、%of US drivers say theyre stressed aboutaffording car insurance,”Policygenius,May 17,2023.18.J.D.Power,“Auto insurance shopping and switch rates reachnew highs as premiums surge,J.D.Power finds,”press release,April 27,2023.19.Maxime Croll,“Robinsons retention could become a majorissue for P&C insure

218、rs,”Property Casualty 360,April 10,2023.20.Benjamin Keys“Your homeowners insurance bill is the canaryin the climate coal mine,”New York Times,May 7,2023.21.Christopher Flavalle,Jill Cowan,and Ivan Penn,“ClimateShocks are Making Parts of America Uninsurable.It just gotworse,”New York Times,May 31,202

219、3.22.Fitch Ratings,“US homeowners insurers to see improved 2023results on premium growth,”press release,March 28,2023.23.Ibid.24.Fernando Casanova Aizpun,Loic Lanci,Roman Lechner,Arnaud Vanolli,and Li Xing,Sigma:World insuranceStirred,and not shaken,Swiss Re Institute,July 10,2023.25.Ibid.26.Ibid.27

220、.Kelly Cusick,Michelle Canaan,and Val Srinivas,Embeddedinsurance is poised for exponential growth,Deloitte Insights,July 27,2023.28.InsTech,“Insurance:To embed or not to embed,”June 30,2021.29.Ibid.30.Matthew Lerner,“Parametric cover gains ground in hardmarket,”Business Insurance,May 3,2023.31.Ibid.

221、32.Siddhartha Jha,“Parametric insurance:The potential forunderserved communities,SMEs,”Property Casualty 360,March 23,2023.33.Gloria Dickie and Simon Jessop,“Factbox:ParametricInsurance policies help cushion climate impacts,”Reuters,May19,2023.34.Akankshita Mukhopadhyay,“Munich Re launches innovativ

222、ecoverage for AI solutions,”Reinsurance News,April 28,2023.35.Terrence Dopp,“A hot market:Insurers launch climate-related business as green tech grows,”Bests Review,accessedSeptember 6,2023.36.Luke Gallin,“Hiscox reveals ESG syndicate launch plan,”Reinsurance News,March 8,2023.37.The Business Resear

223、ch Company,Specialty insurance globalmarket report 2023,accessed September 6,2023.38.Ibid.39.LIMRA,“LIMRA:2022 life insurance sales match record set in2021,”press release,March 14,2023.40.Ibid.41.Aizpun,Lanci,Lechner,Vanolli,and Xing,Sigma:Worldinsurance.42.Ibid.43.Ibid.44.Fernando Aizpun Casanova e

224、t al.,Sigma:Economic stressreprices riskGlobal economic and insurance market outlook2023/24,Swiss Re Institute,November 17,2022.45.LIMRA,“LIMRA:Another record breaking quarter for USannuity sales,”press release,May 2,2023.46.Cyril Tuohy,“LIMRA forecast:2023 could finish as a recordyear for annuities

225、,”Life Annuity Specialist,July 26,2023.47.LIMRA,“LIMRA:Another record breaking quarter for USannuity sales.”48.AIA,Investing in a healthy Asia:Annual report 2020,accessedSeptember 7,2023.49.Gabriel Olano,“Singapore insurers revenue to benefit fromdigital distribution,”Insurance Business,December 10,

226、2022.50.Santosh Kutty,Dan McCoach,Ralph Bradley,MichelleCanaan,and Dishank Jain,Life and annuity insurers considerthe path less traveled:Core-system modernization is becomingtable stakes,Deloitte Insights,June 15,2023.2751.Ibid.52.Jim Gauger,Mary M.Art,Eric Sondergeld,Legacy systemsmodernization:Cor

227、e systems strategy for policy administrationsystemsLIMRA/Deloitte legacy systems and modernizationreport,Deloitte,accessed September 7,2023.53.Kutty,McCoach,Bradley,Canaan,and Jain,Life and annuityinsurers consider the path less traveled.54.Ibid.55.FintechGlobal,“Modern Life and Lincoln Financial te

228、am up fordigital insurance,”September 28,2022.56.Ryan Smith,“Munich Re partners with insurtech,”InsuranceBusiness,March 27,2023.57.Omar Faridi,“Insurtech Socotra targets European expansionfor business growth strategy,”Crowdfund Insider,February 22,2023.58.Swiss Re Institute,The Life&Health Insurance

229、 InclusionRadar:Why markets are more,or less,inclusive,March 2023.59.Eduardo Ortiz Reynaga and Maik Schaefer,“How 3 insurtechmodels work for low-income people,”Catalyst Fund,February21,2021.60.Ibid.61.Kutty,McCoach,Bradley,Canaan,and Jain,Life and annuityinsurers consider the path less traveled.62.I

230、bid.63.Tyler Hammel,“PEs commitment to insurance space toprove resilient despite deal downturn,”S&P Global MarketIntelligence,January 17,2023.64.Cyril Tuohy,“Growth of Worksite Product Sales Slows inFourth Quarter,Rising 8%,”LIMRA,April 28,2023.65.Ibid.66.Ibid.67.Based on the results of a Voya Finan

231、cial Consumer Insights&Research survey conducted October 1011,2022,on the IpsoseNation omnibus online platform among 1,004 adults aged 18+in the United States.68.Warren S.Hersch,Why the workplace market for long-term-care coverage blew up,Life and Annuity Specialist,February8,2023.69.Ibid.70.Michell

232、e Andrews,“Washington state retools first-in-nationpayroll tax plan for long-term care costs,”NPR,April 17,2022.71.Hersch,Why the workplace market for long-term-care coverageblew up.72.Ibid.73.Finextra,“Insurance startup YuLife lands in the US,”pressrelease,October 25,2022.74.Paul Davidson,“Are we i

233、n a recession?US economy has beenremarkable resilient so far,”USA Today,June 12,2023.75.Kirti Jha,“National Insurance Awareness Day:How is AIrevolutionizing the insurance sector?Experts weigh in,”MintGenie,June 28,2023.76.David Agnew,“Predict&Prevent:How a new generationof tech is mitigating general

234、 property losses before they occur,”Risk&Insurance,April 8,2023.77.Barry Cooper,“How organizations can leverage generative AIto reinvent the customer experience,”Forbes,May 11,2023.78.AXA,“AXA offers secure generative AI to employees,”pressrelease,July 27,2023.79.LLMs are atype of AI that are curren

235、tly trained on a massivetrove of articles,Wikipedia entries,books,internet-basedresources,and other input to produce human-like responses tonaturallanguagequeries;Lucas Mearian,“What are LLMs,andhow are they used in generative AI?,”Computer World,May30,2023.80.Send,“InsurTech Send launches smart sub

236、mission product toincrease insurers submission-to-quote ratios,”press release,June 27,2023.81.European Parliament,“EU AI Act:First regulation on artificialintelligence,”June 14,2023.82.Maria Dinzeo,“Cyberattacks are accelerating with AIs help,”Property Casualty 360,June 13,2023.83.Satish Lalchand,Va

237、l Srinivas,and Jill Gregorie,Usingbiometrics to fight back against rising synthetic identity fraud,Deloitte Insights,July 30,2023.84.Brittney Meredith-Miller,“Insurance industry hiring trends for2023,”Property and Casualty 360,February 1,2023.85.TrueUp,“The Tech Layoff Tracker,”TrueUp,accessedSeptem

238、ber 7,2023.86.Elizabeth Blosfield,“Youve been laid off.Now what?Navigating InsurTechs workforce transformation,”CarrierManagement,March 6,2023.87.Deloitte Insights,Deloitte 2023 Human Capital Trends:AFinancial Services Industry perspectiveNew fundamentals fora boundaryless world,accessed September 7

239、,2023.88.Steve Hatfield,Tara Mahoutchian,Nate Paynter,Nic Scoble-Williams,John Forsythe,Shannon Poynton,Martin Kamen,Lauren Kirby,Kraig Eaton,and Yves Van Durme,Powerhuman impact with technology,Deloitte Insights,January 9,2023.89.Interview with Jen Warne,executive vice president and chiefpeople off

240、icer,Lincoln Financial Group,by the Deloitte Centerfor Financial Services,June 17,2022.90.Hatfield et al.,Power human impact with technology.91.Unqork,“3 ways technology can minimize life insurance lapserates,”accessed September 7,2023.92.Brian Droz,“5 ways a company mission improvesengagement,”Peop

241、lelogic,May 3,2023.93.David Sherwood and Namrata Sharma,Its time for theinsurance industry to strengthen its climate risk governance,Deloitte Insights,May 2,2023.94.Discussion with Hans-Juergen Walter,Deloitte FSI GlobalSustainable Finance lead,May 26,2023.95.Ibid.96.Russ Banham,“ESG in insurance un

242、derwriting:Europeaninsurers lead the way,”Carrier Management,February 3,2021.97.Saumya Jain,“Chubb launches Climate+Renewables,its firstglobal climate tech insurance solution,”Reinsurance News,May 11,2023.98.UNEP,“Public statement by the United Nations EnvironmentProgramme on the UN-convened Net-Zer

243、o Insurance Alliance,”May 24,2023.99.Dilip Krishna,Margaret Doyle,Samia Hazuria,and DuncanStewart,Could technology innovations help reverse the climatechange trajectory?Not without a lot more money.,DeloitteInsights,July 27,2023.100.Ibid.2024 global insurance outlook28101.Luke Gallin,“AXA XL,Fidelis

244、 MGU,Chubb among reinsurersfacilitating debt conversion for marine conservation,”Reinsurance News,May 10,2023.102.Sherwood and Sharma,Its time for the insurance industry tostrengthen its climate risk governance.103.Ibid.104.Paolo Gaudiano,“Two years after George Floyds murder,isyour DEI strategy per

245、formative or sustainable?,”Forbes,June27,2022.105.Dr.Leroy D.(Lee)Nunery II,The next steps on the journey:Has anything changed?,March McLennan and NAAIA,accessed September 7,2023.106.Ibid.107.Alison Rogish,Neda Shemluck,Samia Hazuria,and PattyDanielecki,Advancing more women leaders in financial serv

246、ices:A global report,Deloitte Insights,June 16,2022.108.Ceres,“New report shows the US insurance industry providesinadequate coverage for climate-related disasters,”Cision PRNewswire,January 24,2023.109.John Bremen,Shai Ganu,Amy Sung,and Matt Wurtzel,“Human capital is the key to a successful ESG str

247、ategy,”WorldEconomic Forum,September 2,2021.110.Ethan Klingsberg and Victor Ma,“Trend in Delaware meritsheightened attention by acquirors,”Harvard Law School Forumon Corporate Governance,September 6,2023.111.Deloitte,Long Duration Targeted Improvements(LDTI)lessons learned,accessed September 7,2023.

248、112.Deloitte,Integrating implementation for IFRS 17 and LDTI,Deloitte,October 2019.113.Stephen Keane,“IFRS 17:New technology,new capabilities,and new business benefits,”Deloitte Global and EconomistImpact,2023.114.Deloitte,Targeted improvements for long-duration contracts,accessed September 7,2023.1

249、15.Deloitte,TMT Tax Talks,Deloitte,April 4,2023.116.Matthew Williams,David Little,and Dillon McDaniel,“Pillar2:Time for US multinational enterprises to act,”Tax Adviser,June 1,2023.117.Ibid.118.Deloitte,“US Congress passes 15%corporate alternativeminimum tax,”August 15,2022.119.Clyde&Co,“Global insu

250、rance M&A activity hits 10-year highin 2022;mixed outlook for 2023,”press release,February 27,2023.120.Ibid.121.Ibid.122.Pierre-Olivier Gourinchas,“Global economic recovery enduresbut the road is getting rocky,”IMF,April 11,2023.123.Clyde&Co,“Global insurance M&A activity hits 10-year highin 2022;mi

251、xed outlook for 2023.”124.Chubb,“Chubb completes acquisition of Cignas PersonalAccident,Supplemental Health and Life Insurance business inAsia-Pacific,”press release,accessed September 7,2023.125.Doug Sweeney,Mark Purowitz,Matt Hutton,“2023 InsuranceM&A outlook:Balancing uncertainty with optimism,”D

252、eloitteInsights,November 28,2022.126.Hammel,“PEs commitment to insurance space to proveresilient despite deal downturn.”127.Interview with Barry Chen,Doug Sweeney,and Mark Purowitz,Deloitte M&A leaders,May 5,2023.128.Hammel,“PEs commitment to insurance space to proveresilient despite deal downturn.”

253、129.Doug Sweeney,Mark Purowitz,Matt Hutton,“2023 InsuranceM&A outlook:Balancing uncertainty with optimism.”130.AIA,“American Financial Group to acquire Crop Risk Servicesfrom AIG for$240M,”press release,May 22,2023.131.Ibid.132.Lemonade,“Lemonade completes acquisition of Metromile,”press release,Jul

254、y 28,2022.133.Erin Ayers,“Agency M&A deals drop 24%in first-half 2023:OPTIS,”ZYWAVE,August 3,2023.134.Ibid.135.Mary Ann Azevedo,“Fintech in 2022:A story of fallingfunding,fewer unicorns and insurtech M&A,”TechCrunch,January 19,2023.136.Zinnia,“Zinnia to acquire Policygenius,a leading digitalinsuranc

255、e marketplace,”press release,April 25,2023.29Karl HKarl Hersch is Deloittes US Insurance leader,responsible for leading the firms overall insurance sector strategy and bringing the firms practice areas together to serve Deloittes portfolio of insurance clients.James Colaojacolacodeloitte.caJames Col

256、ao is a partner in Deloittes Financial Services practice and the national Insurance sector leader.Colaco has been with Deloitte for over 15 yearsall spent with the Financial Services industry,and primarily in the Insurance sector.Over his tenure at the firm,he has worked with clients in Canada,the U

257、nited States,the United Kingdom,Europe,South America,and the Middle East.His areas of focus are corporate and business unit strategy,customer and product innovation,business case development,and large-scale business transformation.Michelle CMichelle Canaan is the Insurance research leader in the Del

258、oitte Center for Financial Services.As a subject matter specialist for the insurance industry,Canaan produces thoughtware on current and future trends,including strategies and solutions for our clients.Some of the papers most recently authored by Canaan are Financial inclusion and the underserved li

259、fe insurance market,part two:Closing the US coverage gap to drive growth and bolster DEI and Closing the gap on US retirement savings.About the authors2024 global insurance outlook30Contact us Our insights can help you take advantage of change.If youre looking for fresh ideas to address your challen

260、ges,we should talk.Joanna Wong Insurance LeaderDeloitte China+852 2852 .hkMa QianluInsurance Audit&Assurance LeaderDeloitte China+86 10 8512 Ophelia Au YoungActuarial LeaderDeloitte China+852 2238 .hkChris CheungFSI Financial Advisory LeaderDeloitte China+86 10 8512 Alvis KongInsurance M&A Advisory

261、Partner Deloitte China+852 2852 .hkGeorge HanInsurance Risk Advisory LeaderDeloitte China+86 755 3637 Harry WangInsurance Risk Advisory PartnerDeloitte China+852 2238 .hkAnthony LauFSI Tax and Business Advisory Leader(Hong Kong)Deloitte China+852 2852 .hkFrancesco NagariFSI Leader(Hong Kong)Deloitte

262、 China+852 2852 .hkEric LuInsurance Deputy Consulting LeaderDeloitte China+86 20 2221 Kelly ZhouInsurance Consulting PartnerDeloitte China+86 21 2316 Barry ManInsurance M&A Advisory Partner Deloitte China+86 10 8520 Fang YeFSI Risk Advisory LeaderDeloitte China+86 21 6141 1569 David JiangInsurance R

263、isk Advisory PartnerDeloitte China+86 21 2312 Natalie YuFSI Tax and Business Advisory Leader(Chinese Mainland)Deloitte China+86 10 8520 Jonathan CulverFSI Tax and Business Advisory PartnerDeloitte China+852 2852 .hk3131AcknowledgmentsThis report was researched and coauthored by Namrata Sharma,insura

264、nce research manager,and Dishank Jain,insurance research assistant manager,Deloitte Center for Financial Services.The Center would like to thank the Deloitte professionals who provided additional insights and perspectives in the development of this outlook in the following areas:US leaders Karl Hers

265、ch(US national sector leader/Consulting leader)Rich Godfrey(Advisory)Joe DeSantis(Audit)Doug Welch(Life insurance)Mark Yoest(Group insurance)Chris Albert/Chris Puglia(Tax)Kelly Cusick(P&C Insurance)David Sherwood(Regulatory/ESG)Global leaders James Colaco(Global Insurance leader)Andy Masters(the Uni

266、ted Kingdom)Claude Chassain(DCE/France)Tim Pagett(APAC)Nils Dennstedt(Germany)Sanjoy Datta(India)Subject matter specialists Non-life insurance:Kelly Cusick,Mark Patterson,Puneet Kakar Life insurance:Kevin Sharps,Doug Welch,Puneet Kakar Group insurance:Mark Yoest,Matthew Klaus Talent:Sonia Sood,Jeff

267、Goodwin,Anna Nowshad(FoW),Tina Whitney,Andy Liakopoulos,Nicole Scoble-Williams(FoW),Holger Jens Roger Froemer(FoW)Technology:Arun Prasad,Missy Goldberg,Kevin Sharps,John Matley,Stephen Casaceli,Cindy MacFarlane,Joanna Wong,Mukul Ahuja,Mark Patterson,Martin Niedersoee,Nikhilesh Ramani ESG to SC&E:Cri

268、stina Brodzik,David Sherwood,Joe Guastella,Kristen Sullivan,Greg Lowe,Rohit Sharma,Donna Szatkowski-Zych,Hans-Juergen Walter,Celine Bak,Sonia Sood Mergers&Acquisitions:Doug Sweeney,Mark Purowitz,Barry Chen Finance transformation:Bryan Benjamin,Joe DeSantis,Stephen Keane,Jaseung Coue Tax:Chris Albert

269、,Eli Katz,Matt Bernard Cost management:Fahad Salah-Ud-Din2024 global insurance outlook3232About the Deloitte Center for Financial ServicesThe Deloitte Center for Financial Services,which supports the organizations US Financial Services practice,provides insight and research to assist senior-level de

270、cision-makers within banks,capital markets firms,investment managers,insurance carriers,and real estate orga-nizations.The center is staffed by a group of professionals with a wide array of in-depth industry experiences as well as cutting-edge research and analytical skills.Through our research,roun

271、dtables,and other forms of engagement,we seek to be a trusted source for relevant,timely,and reliable insights.Read recent publications and learn more about the center on D.ConnectTo learn more about the vision of the DCFS,its solutions,thought leadership,and events,please visit sign up for more inf

272、ormation and personalize the content sent to you,including our latest research,articles,and webcasts,please visit My Deloitte.EngageFollow us on Twitter at:DeloitteFinSvcs3333Continue the conversationIndustry leadershipKarl HerschUS Insurance sector lead|Principal|Deloitte Consulting LLP+1 973 602 5

273、252|Karl Hersch is Deloittes US Insurance leader,responsible for leading the firms overall insurance sector strategy,bringing the firms practice areas together to serve Deloittes portfolio of insurance clients.James ColaoGlobal Insurance sector lead|Partner|Deloitte Consulting LLP+1 416 301 7259|jac

274、olacodeloitte.caJames Colao currently serves as Deloittes Global Sector leader for Insurance,operating within the Financial Services industry.Additionally,he is a strategy partner in the Canadian Monitor Deloitte practice,as well as the Global Lead Consulting partner for one of Deloittes largest glo

275、bal insurance clients.ContributorsEditorial:Karen Edelman,Abrar Khan,Arpan Kr.Saha,Hannah Bachman,Pubali Dey,and Emma DowneyCreative:Jim Slatton,Molly Piersol,Govindh RajCover artwork:Jim SlattonThe Deloitte Center for Financial ServicesJim EckenrodeManaging director|Deloitte Center for Financial Se

276、rvices|Deloitte Services LP+1 617 585 4877|Jim Eckenrode is a managing director at the Deloitte Center for Financial Services.Michelle CanaanResearch manager|Deloitte Center for Financial Services|Deloitte Services LP+1 212 436 3291|Michelle Canaan is a senior manager and the insurance research lead

277、er at the Deloitte Center for Financial Services.2024 global insurance outlookPublished in collaboration with Deloitte Insights.About this publication This publication contains general information only,and none of Deloitte Touche Tohmatsu Limited,its member firms,or its and their affiliates are,by m

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