1、ContentsKey messages 2 HYPERLINK l _TOC_250000 Where do insurers stand as they enter 2021? 3Expense management still front and center tofree up funds for accelerated digitization 6Technology could play a crucial role, but mostfeel digital capabilities come up short 10Insurers reevaluate talent strat

2、egies by balancingreturn-to-office plans with a hybrid workforce 14Finance priorities reconsidered for reporting,M&A, and taxation 21Insurers should keep innovating to thrive afterthe pandemic 27 HYPERLINK l _bookmark0 Endnotes 29KEY MESSAGESThe COVID-19 pandemic severely disrupted insurer operation

3、s, prompting an overnight shift to remote work and virtual customer engagement while exposing gaps in digital capabilities and raising cybersecurity concerns.Deloittes global outlook survey of insurance executives found expense management more strongly emphasized than before the outbreak. However, r

4、ather than cutting costs across the board, most insurers are likely delaying or scaling back prepandemic investments in part to free up capital for higher priority projects and talent that can help them adapt sooner rather than later.The need to accelerate digitization and enhance virtual operations

5、 turned headwinds into tailwinds at many insurers, driving faster action to deliver within the coming year what might originally have been three-to-five-yeartransformation plans.Necessity might have been the mother of reinvention for many insurers during the pandemic, but the speed of change and muc

6、h greater reliance on connectivity and remote access may also generate a host of new exposures for carriers and their policyholders, particularly in terms of cyber risk and business interruption.Where do insurers stand as they enter 2021?WHAT A DIFFERENCE a year makes. Or even a few months. The COVI

7、D-19 pandemic and resulting economic falloutradically shifted consumer and employee needs, habits, and expectations, while compelling virtualization of insurer operations practically overnight. But while most of those in the industry adapted quickly, insurers are still likely facing lingering obstac

8、les to growth and profitability in the year ahead.A global outlook survey by Deloittes Center for Financial Services found that many insurers know they still have their work cut out for them, even after spending most of 2020 adapting to the outbreaks impact. Forty-eight percent of 200 responding ins

9、urance executives agreed the pandemic “showed how unprepared our business was to weather this economic storm,” while only 25% strongly agreed their carrier had “a clear vision and action plan to maintain operational and financial resilience” during the crisis. (See“Methodology” for details about who

10、 was surveyed.)Pandemic losses hurt the property-casualty bottom lineThe pandemic and other catastrophe losses hit many insurers hard in first-half 2020, especially those writing events cancellation and workerscompensation. To illustrate, North American property-casualty insurers saw first-half annu

11、alized GAAP operating return-on-average equity fall to 2.8% from 8.3% the year before, in large part due to US$6.8 billion in incurred losses related to COVID-19 and concurrent drops in premium volume for key lines.1 Overall, the year- to-date total return of S&Ps Insurance Industry Index lagged the

12、 broader S&P 500 by 24.6% as of September 30, 2020.2Given the pandemics impact on employment, business activity, and trade, global nonlife premiums are expected to be flat for full-year 2020, including a 1% decline in advanced markets.3 However, despite these challenges, the industry may yet rebound

13、 to 3% growth in 2021, led by a potential 7% boost in emerging regions (figure 1).4FIGURE 1Global nonlife premiums falter in advanced markets, but keep growing in emerging countriesMarkets20092018A20192020E2021FAdvanced2.6%2.7%-1%3%Emerging7.7%7.7%3%7%World3.2%3.5%0%3%Note: A denotes average, E deno

14、tes estimate, and F denotes forecast.Source: Swiss Re Institute, sigma No. 4/2020.The pandemic and its aftermath are expected to continue hitting some property-casualty lines harder than others. Workers compensation insurance sales, for example, were undermined by massive job losses,5 and Deloittes

15、US premium projection suggests volume may not return to prepandemic levels until after the fourth quarter of 2022.6 In addition, small business premiums, battered by shutdowns and bankruptcies, may also be slow to recover if many more retailers, restaurants, and personal services outlets close down.

16、On the other hand, while many US auto insurers saw a significant loss in premiums after providing policyholders with rebates and rate cuts to reflect less driving during the pandemic, carriers may see improved profitability with an expected drop in accident frequency.7Life and annuity sales undercut

17、 by pandemic, interest rate dropLife insurance premiums may decline 6% globally through the end of 2020 and by 8% in advanced economies, while a recovery of 3% growth is projected overall for 2021. Emerging markets once again will likely lead the way while advanced markets continue to struggle (figu

18、re 2).8FIGURE 2Global life insurance premiums written are forecast to recover to prepandemic levels in 2021Markets20092018A20192020E2021FAdvanced0.6%1.3%-8%2%Emerging6.5%5.6%0%7%World1.5%2.2%-6%3%Note: A denotes average, E denotes estimate, and F denotes forecast.Source: Swiss Re Institute, sigma No

19、. 4/2020.Meanwhile, annuity sales also took a big hit. In the United States, for example, nearly all types of annuities plunged by double-digits in the second quarter (see figure 3), except for registered index- linked productswhich are a cross between fixed and variable annuities with limited downs

20、ide investment risk.9Growth and profitability in both annuities and many nonterm life insurance products will likely be impacted through 2021 and beyond by persistently low interest rates. The Germanyear yield, for one, is expected to remain negative,10 while the US Federal Reserve has indicated it

21、will likely leave rates near zero at least through 2023.11 This could pose challenges, particularly for insurers with increased exposure to lower-rated, less-liquid investment-grade securities.12 The same goes for annuities, as lower interest rates historically prompt a reduction in benefits offered

22、, which could make them a harder sell this coming year.13At the same time, life insurers may see 50% more losses on mortgage loans than what they experienced during the Great Recession.14While it was hoped the pandemic might at least raise consumer awareness about the value of mortality products, a

23、J.D. Power study found that not necessarily to be the case. Despite COVID-19 fatalities exceeding 200,000 in the United States at the time of the study, consumers surveyed did not seem any more motivated to buy life insurance, due to a “combination of infrequent client communications and a pervasive

24、 perception of high cost and transaction complexity.”15 This indicates the industry likely has more fundamental issues to address to expand consumer awareness and market penetration.FIGURE 3Total US annuity sales plummet in Q2 2020Product salesQ2 2020% CHANGE FROM Q2 2019Total annuities$48.8B-24%Var

25、iable annuities$20.5B-20%Registered index-linked annuities (RILAs)$4.5B8%Total fixed annuities$28.3B-26%Single premium immediate annuities (SPIAs)$1.5B-44%Deferred income annuities (DIAs)$370M-50%Note: All dollar values are in US dollars.Source: LIMRA, “Secure Retirement Institute: Total US annuity

26、sales tumble in the second quarter amid economic fallout from the pandemic,” July 27, 2020.Looking ahead to 2021 and beyondBusinesses must concurrently manage three key phases of the COVID-19 crisisrespond, recover, and thrive.16 When the pandemic emerged, insurers responded by taking immediate step

27、s to ensure business continuity, and help customers and their communities cope.17 As they head into 2021, insurers should consider a mix of offensive and defensive actions to accelerate longer-term recovery efforts and pivot to the thrive phase when growth is reemphasized, despite challenging econom

28、ic conditions.Deloittes third-quarter US forecast includes a 55% probability that under the most likely scenario, with the population being vaccinated throughout2021, there may still be “significant drags on economic growth.”18 Worse, there is a 25% probability of facing a “no end in sight” scenario

29、 where a vaccine is delayed, resulting in protracted weakness in the economy.19Considering these and other challenges facing insurers around the world, this years outlook uses Deloittes global survey to explore both the tactics industry leaders are following to ensure their foundation remains strong

30、 for however long the pandemic lasts, as well as the strategies theyre beginning to deploy to position themselves for success in the coming years. We examine how insurers are adapting and planning to invest from the perspective of operations, technology, talent, and finance.Expense management still

31、front and center to free up funds foraccelerated digitizationIN OPERATIONS ACROSS insurance organizations, expense management efforts which began well before the pandemichitremain crucial, not only to offset added costs incurred to respond to the outbreak, but also to fund faster innovation, spur qu

32、icker recovery, and fuel future growth.20 Sixty-one percent of surveyrespondents expect to cut costs between 11% and 20% over the next 12-to-18 months. Those from the Asia-Pacific region (APAC), especially Australia and Japan, anticipate more stringent reductions, with 35% expecting cuts over 20%, c

33、ompared to 19% in Europe and 11% in North America (figure 4).FIGURE 4Proportion of overall cost reduction expected over the next year0% to 10%11% to 20%More than 20%68%21%19%65%16%11%North America Europe22%61%18%35%49%17%Asia-Pacic TotalNote: Percentages may add up to more than 100% due to rounding.

34、Source: The Deloitte Center for Financial Services Global Outlook Survey 2020.However, most insurers are not looking to cut across the board. They are more likely resetting priorities, reducing nonessential expenses, and postponing less critical investments to free upcapital for areas needed to reco

35、ver and thrive, with spending priorities differing by region (figure 5) and type of technology (next section).FIGURE 5Operational priorities dier regionallyDistributionNorth America: New/enhanced online capabilities; bolster agent/broker cybersecurityEurope: New/enhanced mobile app; directnancial ai

36、d to agents/brokersAsia-Pacic: Join multicarrier sales platformsClaimsNorth America/Asia-Pacic: Use moreadvanced data analyticsEurope: Increase use of articial intelligenceProduct developmentNorth America/Europe: Oer parametric policiesAsia-Pacic: Launch/expand usage-based insurance via real-time mo

37、nitoringUnderwritingNorth America: Increase automationEurope: Tighten underwriting standardsAsia-Pacic: Add alternative data sourcesSource: The Deloitte Center for Financial Services Global Outlook Survey 2020.Product development may shake up status quoNew types of coverage may be spurred in part by

38、 the pandemic, such as the launch of more parametric policies (which pay upon the occurrence of a triggering event rather than having to claim a specific insured property loss). This was cited as the top product development priority among North American and European respondents and number three in A

39、PAC. The concept, which has already been rising in prominence in property- catastrophe coverage, might have applications for future viral outbreaks. Lloyds of London recently introduced a parametric business interruption policy for small- and medium-sized firms suffering IT disruptions.21Insurers al

40、so may have opportunities to innovate more in personal lines with the pandemic-induced change in driving habits and work environments. Many of those responding to a Deloitte global auto and homeowners insurance consumer survey taken during the early part of the pandemic indicated a preference for gr

41、eater customization.Younger buyers in particular showed interest in wider-ranging policies, including one covering all types of transportation rather than being tied to one vehicle.22Distribution balances hybrid systemsForty percent of those surveyed expect to increase investment in direct online sa

42、les, which is not surprising since most customers likely didnt want to meet face-to-face with insurance salespeople during the pandemica trend that may continue long term.Still, most insurers indicated they are hedging their bets by supporting agents and brokers in a variety of waysfrom prospecting

43、to sales management.Many European respondents went so far as to cite direct financial aid for struggling distributors as their top priority, although that option finished eighth in North America. Such help will likely be welcome, as nearly half of those surveyed by the Independent Insurance Agents &

44、 Brokers ofAmerica reported a loss of commercial lines clients and decreased revenue for 2020, while 70% received a Payroll Protection Program loan or some other grant or financial assistance duringthe pandemic.23Bolstering cybersecurity for a largely remote sales force during the pandemic was the n

45、umber one distribution consideration of respondents in North Americacoming in second for APAC and third for Europe.Underwriting looks to augment rolesMany insurers are in the early stages of underwriting transformation projects going well beyond automating routine, labor-intensive data gathering and

46、 processing tasks. The ultimate goal is to better leverage artificial intelligence (AI), alternative data sources, and more advanced predictive models to augment an underwriters capabilities and eventually transition them to higher-level, multifaceted rolessuch as portfolio management and greater in

47、teraction with brokers and large customers.24For example, Ping An Life Insurance Company of China has an advanced risk model on its smart underwriting platform that served over 18 million policyholders in 2019 and approved 96% of policies through automated underwriting, cutting average turnaround ti

48、me from 3.8 days of manual underwriting to 10 minutes.25The question is whether most insurers will invest enough to make this vision a reality, at least in the short term. Increasing automation was the top underwriting priority among respondents in North America, but only ranked fourth among those s

49、urveyed in Europe and fifth in APAC. Expanding the use of AI in underwriting ranked eighth in North America versus second in APAC and Europe,while enhancing predictive modeling ranked fifth or lower across all regions surveyed.Claims goes virtual, but can it be a differentiator?Trends prompted by th

50、e pandemic have likely required insurers to contend with much more remote claims handling, formerly executed on the ground.26 Thus, it was surprising that “increasing virtual claims interactions” finished as a fourth claims priority across all regions surveyed. Similarly, “upgrading detection capabi

51、lities for claims fraud” finished sixth, even though fraud frequency often increases during economic distress.27 These results may reflect the need to make hard budgetary choices acrossmultiple priorities.For claims to become a more reliable retention driver and even a competitive differentiator, ca

52、rriers will likely need to not only adopt new technologies and alternative data sources, but “establish a connected partner ecosystem and talent model that values technical claims handling and data science skills.”28 For example, Zurich UK has teamed up with Carpe Data to automate and accelerate its

53、 claims processes and detect fraud using alternative data.29In the long term, such a course would likely help “reduce pressures of an aging workforce as no-touch insurance claims processing increases.”30Compliance challenges emergingRegulators have focused on multiple areas of concern during the pan

54、demic, from policydisputes over infectious disease-related coverage,31 to consumer protection as more sales and claims handling go virtual.32 But there are many other compliance issues for insurers to address that have nothing to do with the pandemic. (Seefigure 6, and look for Deloittes 2021 Insura

55、nce Regulatory Outlook for a comprehensive analysis.)FIGURE 6Insurers face mounting regulatory challenges in 2021Among the pandemic-related challenges:Among the regulatory issues unrelated to the pandemic:Market conduct Articial intelligenceRegulators pay close attention to how insurers are treating

56、 policyholders, both on claims directly prompted by COVID-19 losses, as well as the sudden shift to virtual sales and claims handling.Regulators may seek to scrutinize whats in the “black box” behind underwriting, pricing, and claims algorithms, as the US National Association of Insurance Commission

57、ers sets principles on how insurers articial intelligence systems should operate.Business interruption Social unrestClaims will continue to be a concern, as court challenges overCOVID-19 claims play out and as the industry and governments around the world consider public-private approaches to provid

58、e coverage for future pandemics.Insurers respond to protests against systemic racial discrimination while regulators and advocacy groups spotlight diversity and inclusion eorts among insurer boards and management.Workers compensation Climate changeClaim disputes should mount as more employees return

59、 to their workplaces, while debate continues over liability waivers for employers.Regulators seek to maintain aordable coverage for policyholders in highly exposed catastrophe areas while asking insurers for nancial disclosures specic to climate risk.Solvency concerns Cybersecurity and data privacyW

60、ill rising COVID-19-related and nonpandemic catastrophe losses (such as West Coast wildres) threaten any insurers nancial strength?Insurers face increasing local and global regulations, while some look to pivot to more transparent proactive engagement with consumers oering greater value for more dat