How our services are supporting the insurance industry in a time of change and helping insurers to build strong, trusted relationships with their customers.
We know insurance is changing quickly, and the best-prepared companies will be those that continue to perform in the market. Whether you’re a life, property or casualty insurer, a broker or reinsurer, PwC can provide audit, advisory and tax services, as well as regulatory and risk assessment and IT systems analysis – all designed to make you fit for the future.
Changing consumer tastes, faster access to information, increasing regulation and ever-evolving technology trends are all disrupting the typical business model for insurance industry incumbents. For an industry that works entirely on monitoring risk through timely access to accurate data, it’s arguably never been a better time to be in the insurance sector – at least for a company that can change when they need to. To realise this potential, incumbents have to be ready to adapt. In doing so, they have a chance to lead the charge and disrupt themselves by providing more relevant, technology-enabled and data-driven products and services. If they don’t, someone else is likely to.
One of today’s biggest challenges for today’s insurance incumbents isn’t the pressure from their big rivals; smaller, tech-savvy challengers are looking to take a significant market share. They’re risk-taking, fast acting, well equipped with technology, and they know their customers incredibly well. While established insurance businesses are trying to avoid a death by 1,000 cuts, FinTechs have their own challenges. They need to grow sustainably, scale up with commercial shrewdness and meet each of their regulatory obligations if they want to bring about a new era of insurance innovation.
It’s impossible to talk about innovation in insurance without mentioning the effects of the digital world. Consumers use this resource in a number of ways, and insurance companies need to take advantage of that. Whether it’s to create a new way of communicating or a personalised platform to manage the consumer experience, opportunities abound for the forward-thinking business.
Insurance without information is mere gambling. To control risk exposure, insurance companies need reliable and timely access to accurate information. They need to perform advanced analytics on diverse and deep data sets, before making decisions that are tailored to the user. While all this might have sounded like science-fiction in the past, it’s possible – and essential – for today’s insurance industry.
With more data comes a greater need to protect it. New Zealand is a high-trust environment, but even so, reputations can be irreversibly damaged when cyber attacks happen or when compliance obligations aren’t met. Insurance companies are tasked to constantly keep up with an ever-changing regulatory landscape and a world where hackers are persistently testing the strength of your cyber security processes.
Insurance companies in New Zealand, like much of the world, have moved from servicing one of the wealthiest generations in history to perhaps the most indebted. At the same time, consumer tastes are changing to suit a business that provides clarity and a timely service, whether that’s digitally or through traditional channels. It means there are lots of plates to spin, but insurance businesses can increase their chances of success by placing customers at the centre of everything they do.
All insurance companies reporting under IFRS (International Financial Reporting Standard) will be impacted by the new reporting standard when it becomes effective in 2021 or 2022. IFRS 17 will be the first truly global standard for insurance accounting after 20 years of planning and it will result in significant changes to the way that financial information is presented. Preparing and transition to the new standard will require significant planning and effort, both from a technical perspective and operationally.
IFRS 17 will require insurers to report at a more granular level, which requires more data on your customers or policyholders. Beyond the pure accounting, this presents opportunities to harness data more effectively, to improve the structure of your finance function and to better inform your decision making. Many insurers are either considering or are implementing changes to their administration systems to improve efficiency and replace their ageing-technology, so it makes sense to leverage these in-flight projects to maximise the effectiveness of both projects.
Fundamentally IFRS 17 is about measuring performance of insurers in a transparent way, but the changes will be complex and you need to decide how to tell your story. If you really grab the opportunities that implementing the standard presents, imagine the sort of business you could be running in the next decade with your finance function producing real-time insights and creating better long-term customer outcomes.
The insurance industry is undergoing fundamental transformation as it comes up against the impact of new regulation, new technology, accelerating shifts in consumer demand and mounting competition from InsurTech players. In the face of so many disruptive challenges, it’s important not to lose sight of the huge opportunities they’re creating for insurers.
Specifically, our Insurance teams can assist with: