Industry thought leaders on producing value for society, meeting new customer expectations and adopting GenAI

I recently had the honor of hosting webinars with very insightful and impressive industry thought leaders:

• Emily LeMay – Chief Operations Officer, Global Atlantic Financial Group

• Masashi Namatame – Group Chief Digital Officer, Tokio Marine Holdings

• Frank Schmid – Chief Technology Officer, Gen Re

• Mike Wells – Group Chief Executive Officer, Athora

• Stuart Woollford – Director of Group Brand, AIA Group

I am extremely grateful for their willingness to share their perspectives on the key issues and opportunities facing the global insurance industry. Our discussion focused on the transformative impact of artificial intelligence (AI), ever-evolving customer needs and the blurring of traditional industry boundaries, and the need for insurers to contribute tangible societal value. These three topics were also prominently featured in the most recent EY Global Insurance Outlook. The following is a recap of our conversation.

Delivering more societal value – and highlighting our efforts

There is a general public perception that the industry could do more to address the huge retirement savings and protection gaps that exist around the world. “For centuries, the heart of the industry has always been about protecting people, so organizations should put this focus on shared outcomes at the heart of corporate strategy,” said Stuart Woollford, Director of Group Brand at AIA Group Office. “That's something we've been doing at AIA for some time now and will continue to do because that’s what's right for the business and what's expected of us.”

As part of its commitment to have a positive societal impact, AIA launched the One Billion initiative. The goal is to engage and inspire 1 billion people to take control of their physical, mental and financial wellness so they can live healthier, longer and better lives.

But, based on my conversations with senior leaders across the industry, there is frustration that we don’t do enough in communicating our efforts to, for instance, offer new climate protections and cyber security products. “Everything we do is intangible and we’re not great at highlighting our value,” according to Mike Wells, Group Chief Executive Officer, Athora. “The industry has done a better job of addressing concerns than positioning in the public. We did a lot during the pandemic but you didn’t read about it.”

Athora’s business is predicated on helping customers secure retirement income through guaranteed products. The company’s success is built on the alignment of its investors to that mission, which means it has very long-term capital to deliver on very long-term promises. Athora shows that bottom-line success does not conflict with societal value. And Wells sees the purpose as essential to the business. “Any erosion in trust not only affects insurers, but also advisors, regulators – the entire industry,” said Wells. “Every day, we are completely dependent on managing trust.”

Societal value will take different forms in different markets and at different times. The recent earthquakes in Japan highlighted a significant protection gap in specific local communities and across the country as a whole, according to Masashi Namatame, Group Chief Digital Officer for Tokio Marine Holdings. “We need to continue to extend our coverage for whatever potential accidents and disasters people may face,” he said. Our efforts must be meaningful and valuable so that we can be protectors for those people all around the world.”

Tokio Marine is leading on innovation in this space through the purposeful use of digital and emerging technologies, including AI, to address the opportunities and challenges ahead. And has established the Disaster Prevention Consortium (CORE) in Japan, which to date consists of 114 ecosystem partners across a diverse range of industries and is working to prevent disasters and mitigate their impacts in line with the Fundamental Plan for National Resilience.

Delivering more societal value will be essential for the industry to maintain trust, especially if we work more effectively to define the narrative around the value of our offerings.

Evolving the business model to meet evolving customer needs

Because of the changing needs of all types of insurance customers, more firms are exploring new business models, new products and new ways of going to market. Ecosystems and embedded products top the list. Given the profound changes in how consumers access and use insurance today, EY research and analysis has projected that 30% of all insurance transactions will occur through embedded channels by 2028. Interestingly, in our survey of webinar participants, 35% said life products offered the biggest opportunity for embedded insurance, ahead of personal auto (25%) and home (18%) coverage.

Ecosystem growth will be nearly as dramatic, we believe. In the EY Ecosystem Study, 71% of insurance executives said ecosystems were very important to their company’s success.

US-based life insurance and retirement company Global Atlantic Financial Group (GAFG) views ecosystems as a way to increase its agility in bringing new products to market and engaging with customers, with an emphasis on transparency and trust. “We need to honor our customers and prospective customers while anticipating the needs of the generation to come,” said Emily LeMay, Chief Operations Officer, GAFG. “Our orientation is ‘outside-in.’ Customer input and data are the primary drivers of our solution design.”

The company also engages with distribution partners to figure out ways to get closer to customers, while also tracking leaders in adjacent industries to see how customer demand and preferences might be shaped in the future. Insight generation and data sharing were at the core of the company’s customer-centric, digital transformation. In devising and executing its ecosystem strategy, GAFG seeks flexibility to adjust to further shifts in customer behaviors and in educating rising generations of customers about the value of insurance.

The transformative impact of AI

When it comes to the most significant impacts of AI, almost two-thirds of webinar participants in both Europe and the Asia-Pacific region cited improved efficiency and lower operational costs in our in-session survey. In contrast, only 21% of respondents in Europe said enhanced customer experience and personalization would be the most significant impact. In the Asia-Pacific market, 55% of participants also cited improved efficiency and lower operational costs as the biggest impacts, followed by enhanced customer experience and personalization at 27%.

According to Frank Schmid, Chief Technology Officer of General Reinsurance Corporation (Gen Re), GenAI is a general purpose technology, like electricity and the electric motor, so firms need to think about its impact across the value chain and take a long-term view of its adoption. “History suggests that general purpose tech requires investment and demands time and that productivity gains originate in redesigning workflows,” rather than simple task-level improvements, he said.

The greatest benefit will be in broadening access to insurance, though GenAI also has the potential to lower the expense ratio, allowing insurance to return a greater share of premium income to the policyholder. While such a reduction has been predicted before, GenAI makes it more possible than ever.

In the short term, Gen Re plans to leverage AI to enhance employee productivity, streamline processes and reduce operating expenses. However, these advantages are contingent on the appropriate technological infrastructure, particularly modernized cloud-based architecture, which includes data storage and engineering. “Ultimately, adaptability is critical to success,” said Schmid. “The bulk of gains will come in process innovation and organizational redesign.”

Interestingly, all of our webinar panelists highlighted the need for cultural change if insurers want to deliver more value to individual customers and society as a whole. New thinking and new ways of working will also be necessary to generate strong returns on investments in GenAI and other enabling technologies.

I would love to hear your views on the perspectives we have shared. Please share your thoughts, insights and experiences in the comments section.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.