- Accenture analyzed economic, demographic, and climate trends on the insurance industry and the revenue opportunities these trends create for insurers.
- Between 2020 and 2025, about $200 billion in revenue opportunity will come from new risks, products, and services.
- With these opportunities in mind, we present insights to help insurers innovate for strategic resilience and competitive advantage.
- Innovation investments will hinge on the insurer’s book of business and market positioning, but all insurers are operating in a new revenue landscape.
New York, NY (Apr. 26, 2020) – The global insurance industry will grow by $1.4 trillion between 2020 and 2025, despite current recessionary conditions and upended risk models. To capture a share of this growth and to defend their place in the insurance value chain, carriers must innovate.
In Accenture’s latest report, Insurance Revenue Landscape 2025: Innovate for Resilience, we explore the actions insurers can take to seize new revenue opportunities and retain customers seeking innovative digital offerings.
What’s at stake for insurers
Based on industry recognized forecasts and analyses of more than 70 trends from over 200 sources, we anticipate major shifts in revenue opportunity. Significant global premiums are likely to be renewed with innovative new products and a shift in distribution towards digital channels or third-party platforms.
Insurers cannot rely on historic retention rates to hold within traditional revenue pools. Innovation in both product and distribution is a must if an insurer is to defend existing revenue.
- Historically, customer retention rates have hovered around 85% for most insurers.
- With the shift to digital channels and third-party platforms, insurers who decline to innovate could see revenue declines of nearly 5%.
Deeper analysis of the shifts in risk reveals new innovation-led revenue opportunities beyond the growth in traditional insurance products. At stake is $200 billion in revenue from technology-enabled products and services, value-added services, and monetization of data and technology.
Insurers will need to innovate for competitive advantage in this new revenue landscape while building resilience into their business and product portfolios.
Turn emerging risk into exceptional reward
The approach we outline in our report can inform a resilient strategy for insurers looking to navigate the new revenue landscape over the next five years. The industry will coalesce around 4 areas of innovation.
- Health/wellness and life products and services
- $120 billion in revenue from smart health products and services, particularly for aging populations, and direct life and wealth management products
- Sharing economy, climate change, and cyber threats
- $115 billion in revenue from products and services to address new exposures, like climate change, sharing economy asset usage, and bigger cyber threats
- Integration of tech with traditional P&C products
- $120 billion in products and services enabling smart auto, smart home, and smart manufacturing
- Shifting premium to alternative distributors
- $125 billion from premium shifts to new distributors, like big tech, manufacturers and insurtechs, and direct sales of small commercial insurance
Innovating for competitive advantage with data-driven insights can empower the insurer with a resilient business strategy. Each insurer will have unique needs and customers who require a unique approach to building long-term resilience.
We are a year into the COVID-19 pandemic. The experience proves crisis scenarios can strike fast. Our team has both insurance industry expertise and the innovative solutions to help your business thrive. We welcome the chance to talk with you about it.
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SOURCE: AccentureTags: Accenture, coronavirus, epidemic, Innovation, resilience, trends