Page 29 - The Insurance Times January 2022

46% of insurers failed to report consistent profits between While life products are predicted to grow at 8.5%, in non-
2006 and 2009, and only 20% registered profit margins (net life, double-digit growth is expected in 2021 and 2022. In
profits divided by direct premiums) in excess of 10%. In non- other emerging markets, growth is expected to be weaker
life markets, 49% of all non-life insurers in the sample for non-life insurance products, with an estimated growth
emerging markets recorded negative underwriting margins rate of 6.9% for life insurance products in the next two
(underwriting results divided by direct premiums), with years.
around 36% of non-life insurers reporting margins in the
range of 0% to 10%. Low profitability may indicate an overly The global insurance premium market, in 2019, reached
aggressive focus by insurers on top-line growth rather than USD 6.3 trillion with an estimated contraction of -1.4% in
profitable growth. 2020 and forecasted recovery growth rate of over 3%
between 2021 and 2022. Global non-life insurance premium
The sigma study examines profitability in emerging markets, growth is expected to see a 3.6% annual improvement
and explores whether ownership structure, affiliation with over the next two years, with the core driving factor in the
financial conglomerates, or economies of scale can tilt non-life insurance market stated to be rate hardening
profitability upward. Insurance premiums in emerging in commercial insurance (i.e. where the market is
markets have expanded robustly by 11.0% per annum in real less competitive and underwriters adhere to stricter
terms over the last decade, compared with 1.3% growth in standards).
industrialized economies. Emerging markets'
outperformance is expected to continue in the next decade Digitalization transforming the insurance
and is attracting the attention of global insurers, who look
to emerging markets for profitable growth beyond more value chain
saturated mature markets. The insurance industry is rapidly adapting to these seamless
virtual operations. With the adoption of AI, RPA, cloud
Insurance industry trends and outlook computing, Internet of Things, and blockchain, digitalization
is set to transform the insurance value chain. Currently,
The pace of the global economic recovery will shape the about 68% insurance companies are either in the process
outlook for the insurance market across regions. Advanced of testing or adopting AI. By 2025, the insurance industry
Asia Pacific regions and the US are expected to outperform has the potential to automate 25% of its processes
Advanced EMEA countries in the next two years, with an (especially manual processes like claim processing,
expected 6% growth across 8 of the largest markets in
underwriting, customer service, and policy administration)
commercial property and liability lines. China is set to be the using AI and machine learning. Certain use cases for RPA
world's fastest growing country given quicker adoption of (Robotic Process Automation) include claim settlement,
digital distribution channels across both non-life insurance fraud detection, real-time data analytics, customer
and life insurance markets.
experience, and product personalization.

On combining RPA with AI tools,
bots can help collect data from
internal and external sites, extract
information, analyze customer
history and further identify and
verify fraudulent claims. Digital
advancements working to provide
seamless consumer experiences will
further provide customized pricing
and smaller risk pools based on
customer requirements. An
integrated engagement platform
will allow data, insights and
transactions across multiple
industries to be used among
entities. This will lead to an

The Insurance Times, January 2022 29