The Global Digitalisation of Insurance Industry Is Backed by Insurers and MGAs
COVID-19 has had negative implications on capital availability among half of insurers and MGAs. This means tougher competition, struggling and a hardening marketplace, especially for those who don’t have enough funds or don’t add business value.
How will COVID-19 impact capital availability?
Also, setting up a new business is believed to be much harder among most insurers and MGAs.
In fact, main priorities for insurers to support financial stability over the next year are implementing technology to enhance efficiency and rationalise compensation and headcount.
43% of insurers implement technology to enhance efficiency in Europe
38% of insurers implement technology to enhance efficiency in Asia-Pacific
44% of insurers rationalise compensation and headcount in North America Source:Deloitte, 2020
Due to a tight financial situation, remarkable overall cost reductions will be expected over 2021, globally.
How to survive? Insurers are actively shifting towards implementing digital transformation plans, with Europe taking a strong lead. Nearly all of them are implementing or planning to enhance digital capabilities over the year.
Increased investments in technology clearly support digitalisation. Looking at the average operating-cost breakdown by functions, there’s an increase in IT investments in both P&C and life insurance by 4% and 3%, accordingly, totalling to about 25% of all costs.
As technology is riding the wave, it is starting to affect partnerships, as 41% of insurers will only partner with MGAs that have strong systems. Even more, 71% of MGAs and 51% of insurers considering technology as an important factor in business relationships.
96% of insurers and 84% of MGAs believe the shift to electronic placement and data standardisation will accelerate as a result of COVID-19 (Clyde&Co, 2020).
At Insly, we have seen the take-off of digitalising insurance operations by automating sales and policy administration. This is backed by increasing use of our platform among insurers, brokers, and MGAs throughout the years, as well as a growing number of premiums written on our platform.
If you need help in starting your road to digital transformation, feel free to reach out to get the best advice!
Clyde&Co, Proceeding with caution: A survey of MGA and insurance carrier opinion on the state of the MGA sector, 2020.
Deloitte, 2021 insurance outlook. Accelerating recovery from the pandemic while pivoting to thrive, 2020.
McKinsey, The insurance switch: Technology will reshape operations, 2019.