Appetite for investment risks seems to have risen among global investors post the 2-year-long COVID-19 pandemic. With traces of a slow rebound visible in the economy, most of the central agencies of the world economies are tightening their monetary policies and increasing their interest rates to control the burgeoning inflation. However, on a more competent play of events, insurers across the world are considering ETFs (Exchange Traded Fund) to manage liquidity and enhance yields.
Sustainability is going to be a focus keyword in the insurance market for the coming two years and reports suggest that insurers are going to increase their sustainable investments by about 30 percent over the next two years. Considering the lessons learned from the COVID-19 pandemic and the changing geo-political scenario, many of the top global insurance companies are undergoing a technological overhaul in the coming years. The move involves moving into an end-to-end investment platform that covers the whole spectrum of asset classes while enabling integrated asset-liability and multi-asset risk management. While the pandemic exposed the benefits of digitization, it also expanded the urgency of investments in more climate-friendly portfolios.
Many insurance companies suffered a huge downfall in their brand value due to the simple clause that many of the policies did not cover losses caused due to the pandemic. The ongoing recession is further straining the insurance industry.
Choosing the best cover
In 2020, the YoY profits fell by about 15 percent for the global insurance industry with the Asia-Pacific regions recording a fall of 36 percent. According to a Mckinsey report, although the insurance industry saw some rebound in 2021, thanks to mass vaccination rollouts, it still faces challenges from low interest rates, price comparison websites and sluggardly growth in organic demand for insurance policies in developed economies. There is also a looming threat that the insurance industry across the globe could lose its relevance soon as most of the demand stems from price increases rather than volume or new risk coverage offers.
Insurtechs are proving to be major disruptors of the industry with investments reported from USD 7.2 billion in 2019 to USD 14.6 billion in 2021. Some of the incumbent previously popular names in insurance are facing a huge threat from some of the startups that address the customers through their digitally enhanced client experience. However, investments are pumping in for product innovations and with the evolution of new risks, priorities are also reallocated for new opportunities in the Properties and Casualty (P&C) domain and the life insurance domain.
New Gold Standard for Consumer Expectations
Offline insurance companies are catching up with some of the online insurance companies and their ‘delightful’ digital features. Multi-channel, multi-access experience is the new norm in the digital ecosystem of insurtechs. With revenues expected up to USD 60 trillion by 2030, these digital ecosystems are top investment priorities for driving new businesses.
Many of the incumbent top players of their regional markets are already delivering tailored digital products and services. Many of these companies have reported stable and consistent growth in their businesses thanks to their ingrained valuable operational practices. Through competitive pricing and products, high standards of corporate governance, and a low-risk, low-volatility but high-quality investment policy, many of the top insurance players have maintained their brand value through the grueling pandemic. One such company is the Oman-based Al Ahlia Insurance Company.
Established in 1985, Al Ahlia Insurance Company is one of the oldest non-life insurance companies in Oman. It is part of the Oman International Development and Investment Company SAOG (OMINVEST) group. It offers a wide range of products and services for both the commercial and retail sectors.
In its pursuit of digital excellence, Al Ahlia Insurance Company has developed its online motor insurance platform that proved to be exceptionally popular among motorists who yearned to conduct their business from the safety of their homes. The system is seamlessly integrated with the IT system of the Royal Oman Police. This makes the purchase process seamless, secure and fast for insurers.
Going Further, Together
Driven by a new sense of purpose from their new tagline, ‘Together, we go further’, insurance groups like Al Ahlia are venturing into several initiatives and developments to transform and stand out as digital leaders. They have announced several new developments in their pipeline which could usher in a new revolution in the insurance sector. Their efforts earned them, ‘Most Innovative Insurer Oman 2022’ title from International Business Magazine.
It is the actions from such leaders of the insurance industry that hints at the upcoming digital future of the industry. In the coming future, these industry leaders are building upon the momentum they have achieved and are sustaining an approach of a customer-centric and innovative operating model. In the presence of the rapidly emerging Insurtech startups, the big investors need to contemplate beyond cloud transitions and app developments and realize the real tangible benefits of these technological overhauls in their business ecosystem.
Blog By Ujal Nair
