EY on how re/insurers can innovate amid industry disruption

Commercial insurers and reinsurers navigate a rapidly changing environment shaped by changing customer expectations, technological disruption, and competition from new and unconventional players.

According to information from consultancy EY, the industry is facing a transition from a traditional linear value chain to a dynamic value chain, which creates new opportunities for innovation and growth.

EY's latest NextWave report reveals that the inefficient processes and negative incentives of the past are being replaced by direct communication, real-time data feeds, and new services such as risk prevention.

The report suggests that the foundation that many insurers created to automate basic operations after the pandemic can now be built upon with analytics-driven capabilities critical to future growth.

A key recommendation from EY is for reinsurers/insurers to maintain a strong focus on client needs and a clear objective to drive product and service innovation. Enhanced digital capabilities, increased organizational intelligence, and new talent across the company are identified as key factors for achieving greater operational efficiency and stronger financial results.

EY identifies four key focus points for leadership in the commercial and insurance markets:

• Composition – EY emphasizes that innovation must be directed towards the clear objective of delivering client value. The role of the insurance industry in protecting against critical threats such as cybercrime, climate risk, and geopolitical conflicts is more important than ever.

  As insurance providers develop personalized policies based on in-depth customer information, these policies will gain greater value if they are aligned with a clear purpose that creates social value. EY suggests that new and improved services will eventually replace existing policy types within total value propositions that include active risk prevention and advisory services.
  

• Communication – According to EY, building on basic digitalization is essential for doing business as a whole. To deliver insight-driven services and complementary products at scale, insurers need sophisticated front-end solutions, back-office automation, and advanced data management and analytics capabilities.

  EY advises insurers to focus on transformational investments that deliver value across the business, rather than simply implementing point solutions. The report highlights that real-time connectivity enables a dynamic exchange of value, and common data standards in the industry will facilitate fast, transparent data sharing.
  

• Community – EY notes that collaboration and co-creation are key drivers, as few insurers can address all customer needs alone, especially when facing major threats such as climate change and cyber risks. By creating or joining ecosystems, insurance companies can leverage broader connections and focus on roles that match their core strengths.

  EY suggests that insurers should design an ecosystem that matches the unique needs of customers, use advanced IT infrastructure for secure data sharing, and use outsourcing to scale operations in line with demand.
  

• Talent – Despite technological advances, EY emphasizes the importance of putting people at the center of the insurance business. Creating a culture that values ​​collaboration and creativity is essential to attracting the right talent.

  EY recommends that insurers seek diversity at the highest levels, embrace leadership that aligns work with a broader purpose, and create compelling workforce value propositions to develop a diverse and effective workforce.

Overall, EY data shows that success in the commercial and insurance markets will depend on insurers' ability to innovate with purpose, improve communication, collaborate effectively, and prioritize talent development in an increasingly complex and competitive environment.

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