Deloite CN Fsi 2023 Insurance Outlook en 221021

A report from the
Deloitte Center for Financial Services
2023 insurance outlook

Global insurance industry at a crossroads to shaping
long-term success
About the Deloitte Center for Financial Services
The Deloitte Center for Financial Services, which supports the organization’s US Financial Services
practice, provides insight and research to assist senior-level decision makers within banks, capital
markets firms, investment managers, insurance carriers, and real estate organizations. The center
is staffed by a group of professionals with a wide array of in-depth industry experiences as well as
cutting-edge research and analytical skills. Through our research, roundtables, and other forms of
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Deloitte Insurance Services

Deloitte’s insurance group brings together specialists from actuarial, risk, operations, technology,
tax, and audit. These skill sets, combined with deep industry knowledge, allow us to provide a
breadth of services to life, property and casualty, reinsurers, and insurance broker clients. Learn
more at deloitte.com.
Contents
Key messages 2
Insurers should be pivoting to longer-term reinvention 3
Inflation challenging nonlife insurer profitability even while boosting

prices, top-line growth 5
Life carrier transformation likely key to sustainable growth 8
Group insurers get innovative amid shifting dynamics 10
Human capital outlook: Insurers reinvent workplace strategies and

culture as talent war intensifies 11
Technology outlook: Moving from infrastructure investment to

value realization 16
Sustainability outlook: Insurers should set sights beyond compliance

concerns to make ESG a competitive differentiator 21
M&A outlook: Activity slowing from uncertain economy 27
Finance outlook: New accounting rules put public insurers in

the spotlight 29
The final frontier: Changing culture as the ultimate enterprise

transformation 31
Endnotes 32
KEY MESSAGES
• Insurers are facing a host of macroeconomic and geopolitical challenges likely to
inhibit growth and profitability—including the looming threat of global recession,
continuing fallout from Russia’s invasion of Ukraine, and lingering COVID-19 concerns.
• However, insurers that effectively transitioned during the pandemic to a remote

workforce, as well as virtual customer and distributor engagement, could be better
positioned to capitalize on a more agile digital infrastructure in meeting evolving
expectations for customized products, channels, and services.
• In setting strategic plans, investment priorities, and budgets, insurers should therefore
strive to maintain the momentum of creative adaptation established over the past few
years, accelerating upgrades in systems, talent, and culture while becoming
increasingly proactive, innovative, and customer-centric.
• While technology and resulting improvements in risk selection and pricing are likely to
remain the primary drivers of improved bottom-line performance, insurers should
expect to be increasingly judged by stakeholders on their response to broader
sustainability priorities such as climate risk, diversity and inclusion, social equity, and
transparent governance—all of which could become competitive differentiators in the
battle for talent, investors, and market share.
2
Global insurance industry at a crossroads to shaping long-term success
Insurers should be pivoting

to longer-term reinvention
N
ECESSITY HAS INDEED been the mother of be considered to maintain an ongoing culture of
reinvention for the insurance industry innovation while making customer-centricity the
these past few years, as most carriers were focal point of the industry’s standard operating
remarkably adaptive and resilient in overcoming model. Accomplishing this mindset change will
obstacles raised by the pandemic. This was likely likely depend on how quickly and effectively
thanks in part to all the new technology and talent insurers can:
put in place to upgrade systems and capabilities
well before COVID-19 hit. • Pivot from having laid the foundation for
operational transformation—such as
But it may also be due to a significant change in transitioning to the cloud—to fully realizing the
perspective and approach from what might be value and benefits of infrastructure and
possible or useful at some point down the road, to technological upgrades.
what had to be altered immediately to stay in
business during the pandemic—often under the • Move from responding to requirements of
most trying of circumstances. In such an regulators and other industry overseers to more
environment, any headwinds slowing proactively anticipating and fulfilling
transformation initiatives often became tailwinds, distributor and policyholder expectations,
particularly in accelerating technology and talent setting themselves apart in an increasingly
transformations. Together, these adaptations competitive market.
should leave most carriers better able to withstand
and recover quickly from difficult situations • Broaden their historical focus from risk and
going forward. cost reduction to also prioritize greater levels of
experimentation and risk-taking that drives
Yet this is hardly the time for insurers to rest ongoing innovation, competitive differentiation,
on their laurels. Rising inflation, interest rates, and profitable growth.
and loss costs, along with the looming threats
of recession, climate change, and geopolitical
upheaval, will likely test insurer resiliency. Carriers should be building
They will also be tested by the entry of new
types of competition from InsurTechs and
upon the momentum that
even noninsurance entities such as e-tailers enabled the transition to
a remote workforce and
and manufacturers.
Instead, carriers should be building upon the virtual client engagement

nearly overnight.
momentum that enabled the transition to a remote
workforce and virtual client engagement nearly
overnight. More fundamental adjustments should
3
Interviews with insurers and Deloitte’s direct potential to assess the merger and acquisition
experience working with a wide variety of carriers environment. But we mainly focus on bigger
suggest these reconstituted approaches should go picture, cross-industry agenda setters likely to
beyond tactical tweaks. Cultural changes are also confront insurers in human capital, technology,
likely called for in how insurers: 1) recruit, retain, and sustainability—all areas that could ultimately
and optimize talent; 2) engage with customers in turn out to be competitive differentiators.
customizing and distributing products and
services; and 3) reconcile society’s overriding New, unforeseen wild cards are likely to come into
environmental, social, and governance (ESG) play that are largely out of the industry’s control,
priorities with their own traditional top- and further testing insurers’ ability to adapt on the fly.
bottom-line considerations. But this outlook concentrates on core areas carriers
can and should be able to control in terms of how
In this report, we cite growth opportunities while they view and run their business in a rapidly
addressing challenges facing nonlife, life, and evolving marketplace—not just in 2023 but during
group insurers in an increasingly volatile economy. the rest of this already-turbulent decade.
We have also looked at nonorganic growth
4
Inflation challenging
nonlife insurer profitability
even while boosting
prices, top-line growth
R
AISING REVENUE HASN’T been an issue for Yet while price hikes were among the drivers
most nonlife insurers, thanks to some of the pumping up premium volume and sending US
highest property-casualty rate increases consolidated surplus over the US$1 trillion mark
posted in years—although not all product lines for the first time,5 inflation is driving loss costs
and individual country markets experienced the even higher and faster in most markets,
same growth levels. For example, commercial undermining underwriting profitability.
lines generally saw more robust growth than
personal lines, while homeowners’ premiums As of May 12, average replacement costs were up
usually rose faster and higher than for personal 16.3%—nearly twice the consumer price index rise.6
auto—trends that are likely to continue into 2023 This is in addition to the ongoing effects of social
given ongoing competitive, macroeconomic, and inflation, which elevate insurance claims costs
geopolitical conditions.1 because of increased litigation frequency, broader
liability definitions, and legal decisions trending
Meanwhile, Europe and North America accounted more in favor of plaintiffs—including higher
for two-thirds of 2021’s 6.3% gain in global nonlife compensatory awards from juries, particularly in
premium volume—a major change from recent the United States.7
historical trends, when Asia (especially China)
drove the majority of the sector’s expansion.2 And These factors—along with the increasing impact of
growth wasn’t even uniform across Europe, as catastrophic weather events and cyber risk—were
German insurers saw a 2.4% rise in a more sluggish all likely major contributors to the US$3.8 billion
economy.3 The same goes for price increase trends— net underwriting loss reported by US nonlife
which, while moderating somewhat, are still quite insurers in 2021 despite robust written premium
high by historical standards (figure 1). This year, gains.8 These effects should linger this year and
second-quarter rates are up an average of 11% for perhaps into 2023. S&P Global Market Intelligence
the United Kingdom and 10% for the United States, expects inflation to raise the US combined ratio
versus only 6% for continental Europe and just 3% above 100% for the first time in five years in 2022
for Asia.4 despite anticipated direct written premium growth
of 9.8%.9
5
FIGURE 1
Prices, premium volume are soaring across commercial lines
2022 prices/premiums 2021 specialty Lloyd’s 2021

on the rise market salesiv productionv
• Q2 global prices up 9% • US excess-surplus lines premium • Gross written premiums up

(19th consecutive quarterly rise)i increased 22% in the 15 stamping more than 10%
office states
• Q2 financial/professional lines • 17-point combined ratio
up 16%i • Records set in volume turnaround to 93.5%
• Q2 cyber insurance rates up 79% (US$51 billion) and transactions • £1.7 billion underwriting profit,
in US, 68% in UKi (5.3 million) as more risks were versus £2.7 billion loss in 2020
placed in nonstandard markets
• Q1 reinsurance premiums up
27% in USii and 11% globally on
averageiii
Sources: i. Marsh, “Global commercial insurance rates continue moderating trend as pricing up 9% in second quarter of
2022,” press release, August 1, 2022; ii. Reinsurance Association of America, Quarterly underwriting and operating report, May
27, 2022; iii. Gallagher Re, Gallagher Re global (re)insurers’ financial results report for Q1 2022, May 31, 2022; iv. Wholesale &
Specialty Insurance Association, 2021 stamping office premium and transaction report, January 25, 2022; v. Lloyd's, “Lloyd’s
reports return to profit and a resilient capital position in 2021 results,” March 24, 2022.
Deloitte Insights | deloitte.com/insights
Rising reinsurance rates and shrinking coverage pressures. About half of UK consumers surveyed by
availability are also contributing to market Guidewire said they were at least somewhat likely
hardening while adding to primary carrier to cut their spending on insurance in response to
operating costs. Midyear property reinsurance cost-of-living increases.12
renewals were particularly challenging, as concerns
over inflation’s impact on loss costs as well as
scarcity of retrocessional coverage prompted Opportunities knock for
capacity withdrawals.10 A survey by Reinsurance proactive nonlife players
News found 77% of respondents expecting many
carriers to be unable to secure their desired Even in a problematic economy like this, there are
protection level. 11
likely to be multiple opportunities to improve top-
and bottom-line results through organic growth as
Insurers and their intermediaries may also face the well as enhanced operational efficiencies.
prospect that many commercial and personal
insurance customers could seek coverage For example, the small-business insurance market
reductions or even allow policies to lapse as a appears primed for reinvention, with many buyers
means of dealing with broader inflationary cost surveyed by Deloitte Global seeking new types of
6
policies, greater flexibility in terms, pricing, and More carriers should also be exploring potential
payment options, as well as more holistic loss partnerships to capitalize on the growing
control services.13 Cyber insurance in particular embedded insurance market—with coverage
appears to be in greater demand—although carriers purchased at the point of sale of some other
should proceed with caution as ransomware product or service. Gross premiums are forecast
frequency was up 235% in 2021 compared to 2019, to grow by as much as six times, to US$722 billion
while average ransom payments skyrocketed 370% by 2030, with China and North America expected
over the same two-year period. 14
to account for more than two-thirds of the
global market.19
Meanwhile, the London insurance market could
double in size just by covering the global transition The world of intangible assets—nonphysical
to green energy for policyholders looking to properties with monetary value—is also expanding
achieve net zero on carbon emissions, according to and creating new exposures to cover, from
the London & International Insurance Brokers’ cryptocurrency and NFTs to virtual activities on
Association (LIIBA).15 Buyers around the world will the metaverse. Only 17% of such assets are
annually spend an additional US$125 billion in currently insured, according to research by Aon
insurance-related transition costs by 2030, and Ponemon.20
according to LIIBA’s CEO Christopher Croft, who
said that “if a significant proportion of that $125 Beyond product innovation, insurers should also
billion came to London, it would transform our be accelerating technology transformation
market and London’s standing for decades initiatives to upgrade operational efficiency, pricing
to come.”16 accuracy, claims management, and customer
experience—in parallel with efforts to enhance staff
In personal lines, concerns over whether the rise of capabilities to exponential levels in underwriting21
autonomous vehicles might divert billions of and claims.22 This should help carriers realize the
premiums into product and professional liability full potential of all the new data, analytical tools,
coverages (since the technology and software and enabling technologies at their disposal—from
running the car, not the driver, may be at fault in artificial intelligence to the cloud.
accidents) are unlikely to materialize anytime soon,
given reports that self-driving technology remains More carriers might also consider outsourcing
largely experimental.17 As more such vehicles hit noncore functions to transition from variable to
the roads, however, auto insurers should consider fixed costs as well as provide greater experience
designing split coverage—perhaps similar to hybrid and expertise in areas ranging from human capital
policies already marketed to ride-share drivers in to cybersecurity.
which personal auto applies when off-duty, with
separate commercial coverage activating when
driving for hire. The same bifurcated policies could
be marketed for when autonomous systems are on
versus when drivers are in control.18
7
Life carrier transformation

likely key to sustainable
growth
W
HILE CHANGE HAS often come slowly in FIGURE 2
the life insurance sector, a While life insurance premiums in real
metamorphosis may be underway. The terms are expected to contract slightly
effects of the pandemic are lingering, company
this year across regions, emerging
ownership and product mix are evolving, inflation
markets (excluding China) are
and interest rates are soaring, and consumer
expectations are growing and diversifying.
estimated to grow, led by a 6.6%
increase in India
Addressing these dynamics will potentially require
insurers to shift away from the reactive measures 2022 F
used to navigate the pandemic. To take control of Global -0.2%
their own transformation and destinies, carriers
North America -0.4%
should be proactive, whether it’s by doubling down
on their pandemic-spurred digital enhancements; Europe -1.1%
introducing new products, services, and Asia/Pacific 0%
distribution options; or by seeking out new
Emerging markets excluding China 3.5%
customer niches.
Source: Sigma 4/2022, "World insurance: inflation risks

The pandemic-driven surge in premium growth front and centre", Swiss Re.
since 2020 appears to be waning. Global life Deloitte Insights | deloitte.com/insights
insurance premium growth in real terms is
expected to contract slightly (-0.2%) in 2022 by customizing propositions and innovating
(figure 2), primarily due to inflation-driven distribution to the unique requirements of each of
disposable income pressure and financial market these various groups.
volatility. There is an expectation for a
23
turnaround in 2023 of an estimated 1.9% rise in This will likely require identifying, activating, and
global premiums in real terms across advanced and personalizing products and services for
emerging markets, as inflation pressures ease and underpenetrated segments in various geographies.
economic conditions improve. 24
A US consumer survey revealed that respondents’
needs and desires differed widely between
Therefore, to drive sustainable growth in the life demographics. For example, the youngest age
sector through the shifting operating environment, groups and lowest income earners surveyed were
insurers will likely need to take initiative to seek least familiar with the value and features of
out previously unserved and underserved markets, mortality products, respectively,25 while the lowest
8
earners and oldest age group expressed the least gatherers, administrators, and employee benefit
comfort using digital and online options in sellers. Many carriers, including a number of
addition to or instead of agent interaction.26 private equity (PE) sponsored insurers, are also
seeking to increase asset yields of their acquired
In the Asia/Pacific region, a consumer survey business through less liquid and higher-yielding,
found two-thirds of respondents citing online but also higher-risk, assets.29 Some acquisition
features as key criteria for life insurance opportunities for public life insurance companies
purchases, while the US consumer survey showed
27
may be hindered by reduced currency embedded in
only about one-third of respondents willing to use their stock prices. Nevertheless, the M&A market
an online channel to purchase life insurance. 28
may remain active as the PE-sponsored platforms
Consumers more hesitant to use digital options need to acquire books of business, including
may be more open to the medium if they better reinsurance structures, to maintain growth.
understood the products and their value. Insurers
could work to raise financial literacy by exploring Yield volatility is also something carriers should
new ways to educate underserved populations to consider going in to 2023. For example, carriers
potentially drive more online interaction. This could experience client attrition or an increase in
suggests not only focusing on demographics that policy surrenders as customers seek higher returns
are least likely to understand the value of mortality if yields lag on existing portfolios compared to
coverage at all, but also those that might benefit alternative investments.30 This could put more
from a better understanding of more sophisticated attention and pressure on asset liability
products, as increased confidence could potentially management capabilities.
make online options more palatable. Heightened
client expectations for transparency, ease of doing Inflation may be a double-edged sword for life
business, instantaneous transactions, and hyper- insurers. Some inflation can be beneficial,
personalized experiences mean carriers should improving investment yields as well as spreads on
ensure the most advantageous digital innovations annuities and other interest-sensitive assets, which
initiated by necessity during the pandemic are could boost sales of these products.31 However,
augmented to maintain the momentum of higher operating, labor, and administrative costs
digitization and derive its full value. will likely pressure earnings. In fact, Manulife
Financial Corp is one insurer that is increasing
Rising interest rates could make life insurers a premiums to offset higher costs this year from
more attractive M&A target, as anticipated higher inflation that has risen to a three-decade high.32
future yields can help both product pricing and Inflation pressure is expected to be greatest in
profitability. Indeed, the sale of legacy life emerging markets but may also have significant
insurance businesses will likely continue to impact in the United Kingdom, European Union
advance the transformation of some life insurers (EU), and United States.33
from protection providers to fee-based asset
9
Group insurers get innovative

amid shifting dynamics
G
ROUP INSURANCE REMAINS a significant information could provide a foundation to create
growth opportunity in the North more personalized experiences and tailored
American market. offerings that can drive increased and broader
enrollment in benefits, while building long-term
Life loss ratios and short-term disability incidence, loyalty.36 For example, Guardian Life is partnering
while still elevated, appear to be returning to pre- with InsurTechs, including Noyo and Ideon, which
COVID levels as pandemic-related severity falls, enable connectivity between carriers and other
Deloitte has observed during discussions with partners to standardize data exchange.37
insurance industry executives. Dental claims,
34
which decreased during the height of COVID, are Development of “as a service” solutions offers
also reverting to the norm as people resume their another potential competitive advantage group
pre-lockdown lives.35 insurers can explore. For example, several states
including New Jersey, Massachusetts, and
As metrics across the sector begin to stabilize, Connecticut are increasingly mandating that
however, insurers will likely now grapple with how employers cover paid family and medical leaves.38
to adapt to emerging challenges, such as While navigating the myriad of nuances in these
uncovering new areas of sustainable growth to state mandates may have been a challenge for large
differentiate in a competitive market, as well as multinational employers previously, this issue now
serving multigenerational employees with vastly also concerns small companies operating in a
diverse, evolving expectations. virtual setup with multidomiciled employees.39
Those seeking long-term organic growth may Administrating this patchwork of mandated laws
consider addressing increasing demands for more on leave requirements for employers of all sizes
holistic employee benefits packages. Moving could not only create new sources of fee-based
forward from traditional one-size-fits-all plans for revenue for group disability insurers, but it may
such a diverse segment base will likely require also potentially increase the competitive advantage
offerings that span a broader lifestyle experience for those that take on this pain point for clients.
across health, wealth, and wellness in a
comprehensive way instead of separate There is also likely to be increasing pressure from
transactions or policies for each. the distribution force for further innovation.
Brokers increasingly expect carriers to help their
To facilitate portfolio expansion, many insurers are productivity by providing technology capabilities
beginning to develop partnerships with other for digitalization and virtualization across all
providers as well as third-party vendors. But they activities.40 With enhanced technology capabilities,
should also be looking to eliminate points of carriers should be sharing more data with brokers
friction, if any, among different participants in the as well as employers to design meaningful benefit
group sales ecosystem. The opportunity to combine options and help employees live healthier lives,
employer data with employee-generated which could drive down claim costs.
10
Human capital outlook:

Insurers reinvent workplace
strategies and culture as
talent war intensifies
F
ORCED VIRTUALIZATION OF work during the talent not just with peers but with other, more
pandemic has fueled revolutionary changes in cutting-edge industries.
employee expectations and upended many
traditional employment models (figure 3).
Flexibility, quality and relevance of work, career Shift in thinking and
path, financial wellness, and inclusion now appear culture may help attract
to dominate many employees’ aspirations and are
and retain talent
increasingly being used as parameters of job entry,
longevity, and exit from an organization. Carriers may struggle to fill and retain their
workforce through 2023 unless there are some
This is not unique to the insurance industry, but in novel changes implemented to underlying culture
conjunction with an aging workforce41 and that help these organizations to potentially be
conservative reputation, the challenges are
42
simply irresistible (figure 4).
exacerbated for insurers competing for skilled
FIGURE 3
Change in employee expectations has pushed the “good to have” parameters

to the “we need it all” bucket
Corporate social
Action-oriented
responsibility DEI
“GOOD employer DEI Financial Holistic package;
Paid leaves/time off commitment to short- and long-term
TO HAVE” Support for personal diversity, equity,
quotient wellness
financial needs
Flexibility
commitments and inclusion
Role and responsibilities

Work timing
“WE NEED IT ALL”
Work profile
Work location Flexibility of Flexibility – Dynamic career
Career
Salary location, time, role where, when, profile with clear
enrichment
Insurance Compensation + benefits what enrichment pathways
Retirement fund
Source: Deloitte analysis.

11
FIGURE 4
Culture shifts could create a potentially irresistible work experience
Pride in workplace Flexibility

Embrace mission to help employees feel Based on function/individual needs
proud of their work and where they work Create a
Training/upskilling
potentially Leadership intervention
Embed training into work week to
irresistible Excellent change management
encourage participation culture
New hire acclimation Broad-based hiring

New approaches to onboarding and Embracing diverse workforce
mentorship for better retention

While lockdowns gave rise to the work-from-home Many carriers are still in the testing and learning
phenomenon and insurers reacted accordingly, the stage, dissecting the nuances of each function to
situation has reached an inflection point where gauge where it may fit in a scenario (figure 5), as
organizations will likely need to proactively decide well as understanding where individual employees
which elements of workforce strategies to keep, would like to reside on the future-of-work (FOW)
change, and discard. spectrum. This will potentially be less of a one-and-
done strategy and more of an ongoing journey.43
FIGURE 5
Insurers are trying to find the optimal balance considering the different
future-of-work scenarios
Essential employees Full work

in office every day
In office Virtual from home
Targeting more days Targeting more days at

in the office (three Hybrid/office Hybrid/virtual home (no more than
days or more) two days in the office)

12
“As leaders, we know how critical the role of mentoring/coaching is when developing others. And
to be a great mentor/coach, it requires trust and relationship, which is often best built with our
colleagues in person. At the same time, the pandemic has proven to us that many tasks/work is
more productive while remote. The challenge and therefore opportunity for leaders is to deeply
understand the work as well as what makes their employees most productive and design a hybrid
approach accordingly.”
— Brigid Pelino, senior VP & chief human resources officer, Definity
As evolving workforce concepts shift from could accommodate virtual interaction, insurers
theoretical to practical, arming leadership and could leverage the entire global stage to uncover
management with the tools to prepare employees valuable skill sets and at the same time create a
for change will potentially require shifts in culture more diverse workforce. Stay-at-home parents
throughout the organization. Asking people to returning to the workforce, retirees, gig workers,
come back in person just for the sake of being in and neurodiverse candidates represent some of the
the office might no longer be feasible from an untapped labor pools not traditionally targeted.
attraction and retention lens, so communicating Zurich UK initiated a part-time jobs initiative to
the benefits of in-person collaboration, problem- access a whole new pool of talent, driving the
solving, and team building will be important. application numbers up by more than two-thirds
since the initiative was launched, benefiting
With prospective talent at a premium and working parents, caregivers, and those with
workplace boundaries fading, insurers will likely portfolio careers or other interests they want
need to pivot in the way they think about sourcing to pursue.45
and attracting new employees.44 For functions that
“Companies will need to prepare leaders to lead in this new environment because a lot of
people have had very traditional career paths and may not understand the changing needs and
expectations of their employees. So, I think we need to set our leaders up for success.”
— Sonia Boyle, chief people officer, Gore Mutual Insurance
13
“We have a long-term view on employment—invest in hiring fresh out of college talent and train
them on the job so that they can grow within the organization. With a shrinking younger population,
tiny adjustments to working hours and flexible schedules can help with pursuit of women, retirees,
freelancers, and other such diverse groups.”
— Jana Fallon, VP staffing and executive assessment, Prudential Japan
Moreover, reevaluating current job descriptions across industries could make retention and
instead of remaining fixated on narrower industry- attrition the larger pain point throughout
specific qualifications could open new talent the industry.
channels through broader skills-based hiring.
Numerous flight attendants laid off during the Focusing on understanding and investing in the
pandemic found new careers in Hong Kong SAR’s evolving demands of their current workforce is
booming insurance industry as several large important for organizations. A recent employee
insurers hired them because of their hospitality survey done at Lincoln Financial Group revealed
training and experience in dealing face-to-face that most employees surveyed continue to want to
with customers.46 invest in their career development. However, many
said they find it challenging to carve out time to
Carriers’ culture may need to be modified to be focus on their development when faced with
able to absorb those coming in from outside the ongoing home and work priorities. Lincoln focuses
industry. This may be even more challenging in the on making learning opportunities easily accessible
virtual environment many will reside in. It will and ensuring that employees have time in their
potentially require novel approaches to onboarding, workdays to invest in themselves and their career.49
mentorship, and training47 to help new hires feel
like they are part of the company and not just Organizations could also rethink the employee
the job.48 experience after the skills are obtained, including
transparent career pathways and recognition
While expanding the aperture for skills recruiting models to match the level and competition for
could be a net positive for insurers, fading borders in-demand skills.
14
“One of the key investments, especially in a hybrid work environment, was in recognition—
driven by feedback from employees who wanted acknowledgment and celebration of those
moments that matter.”
— Jen Warne, executive vice president, chief people officer, Lincoln Financial Group
Most employees also want to be connected to an Given blurring boundaries across regions and
organization that evokes meaning and pride for industries, evolving employee expectations, and
them. Gore Mutual Insurance launched a rapid digitalization to support all work
purpose framework earlier this year around environments, the talent conversation going
three pillars that underscore the organization’s forward will likely be about shifting mindsets and
focus, “be good, do good, and spread good,” company culture, not only to be able to attract and
embracing wellness and diversity and inclusion, absorb new talent and skill sets, but to retain
excellent customer experience, and community employees by offering an irresistible work
investment and ESG, respectively.50 environment for satisfying long-term careers.
15
Technology outlook:
Moving from infrastructure
investment to value realization
M
OST INSURERS HAD to ramp up initiatives to line of business and department
digitization plans during the pandemic to heads collaborating with CIOs and CTOs in
transition practically overnight to a enabling roles. Technology strategies and
remote workforce and virtual engagement with investments should be tailored to differentiate
customers. Overall, however, while technology insurers in customer segmentation, product
transformation has often focused on enhancing support, and value-added services, facilitating
internal efficiency and accelerating speed to sustainable growth and profitability.
market, that emphasis has begun to shift for many
insurers to investments improving customer InsurTechs are helping to accelerate technology
experience and bolstering data and analytics transformation in two fundamental ways. For one,
capabilities. The goal for 2023 and beyond should
51
legacy insurers are already facing increased
be to more fully realize the benefits of technology competition from stand-alone InsurTechs
infrastructure investments to make insurers designed for customer-centricity from their
increasingly agile, innovative, and launch. At the same time, many carriers are
customer-centric. benefiting from point solutions offered by
enabling InsurTechs in underwriting, claims, and
Carriers have frequently taken a piecemeal online distribution platforms, among other
approach to technology modernization, customer-facing functions.54
transforming system by system, function by
function, and app by app.52 Investment decisions InsurTech investment boomed in 2021, drawing a
have been mainly driven by shorter-term budget record US$17.2 billion in funding—just slightly
and feasibility considerations rather than achieving below the prior four years combined (figure 6), as
longer-term competitiveness through improved demand for digital solutions rose during the
customer experience.53 pandemic, while more established startups looked
to scale. Investment wasn’t nearly as robust in the
A fundamental shift in perspective and priorities first half of 2022; however, the US$4.64 billion
should, therefore, already be underway. Insurers raised as of July 1 was already just short of the
still running IT-dominated infrastructure projects second-highest full-year total.55
should be shifting leadership of transformation
16
FIGURE 6
While InsurTech investment slowed considerably in the first half of 2022, it is

still likely to be the second highest ever
InsurTech funding by category and investment year (US$M)
Commercial insurance Insurance customer acquisition Insurance operations

P2P insurance Personal insurance
2017
649 849 385 904 2,822
35
2018
432 431 1,769 3,002
341 29
2019
684 550 2,036 2,276 5,778
232
2020
793 978 1,731 496 1,780 5,778
2021
3,969 1,269 3,385 438 8,160 17,220
2022 (through H1)

974 775 801 2,053 4,644
41
Sources: Venture Scanner data as of July 1, 2022; Deloitte analysis.

Meanwhile, advancing data management and Another possible facilitator might be adoption of
analytics maturity should also be one of the main low-code/no-code platforms—visual software
agenda items for insurers. Many carriers still too development programs allowing developers to drag
often treat data as an infrastructure expense to be and drop application components and integrate
managed, rather than as a strategic asset that can them, also referred to as “democratization of
help them learn more about customer needs and application development.”57 These can enable
preferences in terms of products and services. accelerated and streamlined software development
via point-and-click instead of hand coding.
A recent global survey and interviews with chief
data officers by the Deloitte Center for Financial Insurance CIOs and CTOs should consider these
Services found that “upgrading to more holistic alternative development platforms as an agile way
data management systems while empowering to create custom applications while lowering risks
teams to collaborate on data across functions and and costs. It could help insurers innovate more
business lines could help insurers capitalize on quickly with platforms of engagement while
their data and analytics initiatives to accelerate bolstering automation capabilities. For example,
innovation, bolster competitive differentiation, and US-based XN Worldwide Insurance adopted
ultimately sustain profitable growth.”56 CoverGo’s no-code platform to advance its digital
transformation goals and increase customer
satisfaction by improving speed to market.58
17
Technology should enable the flipping of priorities could limit their ability to take full advantage of
from internal core considerations to externally cloud capabilities, as well as experiment, innovate,
focused “customer to core” initiatives. Such and transform their operations.
customer-centricity should help spur continuing
adaptation and innovation that could set carriers Cloud should ultimately be treated like electricity—
apart in an increasingly commoditized market. It as a facilitator. People generally don’t talk about
should also help insurers position themselves as electricity powering light bulbs but focus instead
more holistic risk management and mitigation on enhancing the lighting systems they enable.
consultants, rather than their historical emphasis Cloud should be in the background, providing the
on transactional risk transfer and indemnification. means to forge ahead with more transformative
changes, enabling cross-functional compatibility
and easier orchestration among multiple systems
Cloud capabilities should and applications.
be accelerating shift to
customer centricity While older forms of architecture may have also
intended to offer interoperability, that goal is likely
Transition to cloud platforms may well be the most to be more attainable with cloud-based modular
significant technology initiative launched by architectures and APIs, which can enable various
insurers over the past few years, because of its systems to be integrated in a plug-and-
potential impact throughout the value chain. play manner.
Insurers have spent much time and money
migrating data, systems, and applications to the Ultimately, cloud should be helping insurers
cloud, laying the foundation for even more improve customer experience by bolstering digital
significant capability upgrades across functions capabilities and deepening their understanding of
and lines of business. Many have started policyholder needs and preferences through cross-
establishing a fully native cloud platform on which functional applications and data analytics.
individual applications can be built, configured,
and operated. Still, even as most insurers have begun to
modernize operations through cloud adoption,
However, many are still struggling to realize many remain uncertain how to effectively piece
cloud’s full business value beyond table stakes cost together all their data, applications, and systems
savings and efficiency gains. This is often because on the cloud—especially those areas particular to
parts of legacy technology and non–cloud native insurance. This has prompted the emergence of
applications remain in place, creating a hybrid providers with “industry cloud” solutions for
operating system inhibiting interoperability.59 underwriting, policy administration, claims, and
other insurance value chain elements to layer atop
To realize the full potential of cloud adoption, the more generic platforms offered by hyperscalers.
platform should be seen as a means to an end,
rather than an end in itself. Moving to the cloud “Industry clouds can hypercharge an organization’s
should merely be the beginning of an ongoing capacity to change. Their preconfigured capabilities
transition encompassing more and more data, kick-start the digital build, and continuous
systems, and processes. However, while many innovation-led investment from ecosystem
carriers may have laid the cloud infrastructure, too partners allows users to achieve greater
often they still mimic the siloed manner in which nimbleness, scalability, stability, and optionality,”
operations were handled on legacy systems. This Deloitte noted in a report on industry cloud
18
opportunities.60 The report added that industry interace (API) layer making it easier to plug and
clouds can “allow organizations to focus internal play segment-specific functionality onto a more
time, energy, and resources on the most critical general cloud foundation.
and strategic tasks in a highly competitive tech
talent environment.” As illustrated in figure 7, it is likely that cloud-
native architectures will not revolve around central
Now that many insurers have moved core systems core systems. Rather, the core itself becomes just
onto the cloud, the next challenge will likely be to one part of a broader infrastructure integrating
focus on microimprovements utilizing cloud-based front- and back-office elements. These various
applications specific to their business. This is applications should be able to harmoniously
where industry cloud providers should prove coexist on the cloud, sharing data and supporting
helpful, creating an application programming one another seamlessly.
FIGURE 7
What should a cloud-native architecture look like for insurers?

An agile and modular architecture with the ability to plug and play apps should enable greater
innovation and differentiation
Application layer Potential advantages of cloud-native system
Core system Claims platform Underwriting • Core becomes one part of a broader ecosystem on
a cloud-native platform
Data and Distribution • Applications are modular—easily plugged in and

CRM
analytics systems played, or replaced as necessary
• Data from multiple internal and external sources is

Policy AI and ML streamed right at the point of usage, and is easily
administration consumed and shared across apps
• Industry cloud providers contextualize the

underlying platform for insurance-specific uses
Industry cloud layer
• API layer should make it easier to add customized
functionality on top of cloud foundation
Underlying cloud infrastructure • Hyperscalers provide underlying cloud

infrastructure in a more secure environment

19
A cloud-based infrastructure also should enhance and capabilities put in place to address increased
the usability and effectiveness of different frequency of cybersecurity attacks and expanding
application systems, such as AI and advanced global privacy regulations, in collaboration with
analytics. These capabilities should become more multiple stakeholders across IT, risk and
consumable when embedded within the cloud as compliance, business lines, and functions.
part of any new technological function added,
rather than as a separate system. As Deloitte’s For example, where will data be stored
State of AI in the enterprise, 2nd edition report geographically? Are there appropriate controls to
concluded: “By using cloud services as a gateway, request and manage access? How is data being
it’s never been easier to explore and access AI’s protected by cloud providers? How is access
potential—with minimal upfront investment and a monitored, managed, and authorized? How are
reduced need for in-house expertise.”61 insurers tracking data assets throughout their life
cycle from creation to disposal? Such considerations
Insurers should also take into account geographic can be further complicated as insurers increase
factors affecting cloud implementation—especially adoption of public cloud platforms.
regulatory differences. The EU, for example, sets
General Data Protection Regulation standards
specifically on how companies should process and
protect EU citizens’ data hosted on cloud
platforms.62 Related data storage compliance laws
around the world also should be taken into account
when considering cloud options, particularly for
multinational carriers. “We are deconstructing many systems
across our businesses. That involves
The next leg of the cloud journey—moving unbundling data and individual capabilities
remaining systems and industry-specific functions from their various monoliths and uplifting
onto the cloud while making them more them into microservices using cloud-
interoperable—could take time to implement. But native technologies. To truly transform the
business, we are unbundling not only legacy
insurers should already be taking steps to
technology but also the way our people
overcome lingering legacy obstacles preventing full
have historically worked. Building that future
realization of their cloud infrastructure’s potential.
isn’t easy, but it’s necessary so technology
This can enable carriers to amplify system
can drive us towards the best customer
capabilities while making data more accessible and experience.”
actionable. They could then leverage cloud as a
driver of innovation, differentiation, and growth. — Bob Bastian, global digital CIO, and CIO of US
retirement and insurance businesses,
Prudential Financial
However, as insurers continue to modernize their
infrastructure and data management systems on
and off the cloud, many questions should be raised
20
Sustainability outlook:
Insurers should set sights
beyond compliance
concerns to make ESG a
competitive differentiator
M
ANY INSURERS AROUND the world have proactively seeking opportunities to make ESG
taken significant steps to build an initiatives a differentiating part of their go-to-
organizational infrastructure addressing market strategy and corporate culture. They’ve also
the multitude of challenges posed by generally been focused on regulatory compliance
environmental, social, and governance concerns, and bolstering enterprise risk management, rather
gathered under a single and sometimes unwieldy than innovating to differentiate and establish
“ESG” umbrella. Some have appointed chief themselves as ESG leaders in thought and action.
sustainability officers or their equivalent to
spearhead reporting, compliance, and mitigation Insurers are likely to be judged not just by plans
initiatives.63 This task is unlikely to get easier laid out in annual sustainability reports, but by
anytime soon, with each element posing its own how their initiatives actually 1) limit the impact of
potentially thorny economic, legal, and climate change and other nascent systemic
reputational risks. environmental risks65 while addressing carbon
emissions at the source; 2) diversify their
Yet, how effectively and transparently insurers leadership and workforce; 3) enhance inclusivity of
respond to increasingly vigilant stakeholders— their products and services; and 4) increase
from regulators and rating agencies to transparency and accountability in their
sustainability assessment firms, as well as governance structures.
investors and their own employees—will likely
determine their ability to adhere to a “higher While transitory economic and political
bottom line,” in which the impact of their ESG
64
developments may affect implementation,
efforts on society could be as important as their globally or regionally, how these four overriding
traditional financial statements. goals are reflected in strategic planning,
investment priorities, and budget decisions could
Up until now, most insurers have been focused on very well determine an insurer’s reputation and
responding to mounting calls for more data and competitive position in an increasingly socially
specific statistical commitments rather than conscious economy.
21
“For most companies, having a sustainability plan is no longer a differentiator but an expectation
from customers and employees. As a strong global franchise, we have an important role to play in
the transition to a world where net-zero carbon emissions are a reality. Having a Chief Sustainability
Officer in place is incredibly important, but most effective if the position is senior enough in the
organization and if the person has a business mindset. The CSO’s role is to act as a conductor among
the different businesses and orchestrate change across stakeholders.”
— Sarah Chapman, global chief sustainability officer, Manulife66
Product innovation and risk- This could make good sense from both a societal
transfer offerings may be key and business perspective, as the Swiss Re SONAR
to mitigating climate risk 2020 risk insights report predicts that by 2050,
emerging technologies such as carbon capture and
World leaders are coalescing around the goal of storage have the potential to grow to a size that
cutting carbon emissions by half within this decade may rival today’s oil and gas industries.71
to have a chance of staying below the significant
tipping point of a 1.5 degree rise in global Many European carriers continue to lead insurance
warming. In line with the Paris Agreement, there
67
industry efforts to limit carbon emissions through
are calls for fossil fuels in general and coal in their underwriting and investment portfolios.
particular to be phased out by 2040.68 Aviva declared itself the first major insurer to
target net-zero by 2040; setting timelines to divest
Insurers are well-positioned to be among those and stop underwriting insurance for companies
standing at the cusp of the transition to a low- making over 5% of revenue from coal or less
carbon economy, given their crucial roles as both conventional fossil fuels such as tar sands or oil
underwriters of, and institutional investors in, shale, unless they have signed on to the Science
carbon-intensive industries. Based Targets initiative.72
To start, since more innovation is likely in order to More European carriers are also joining forces with
facilitate the drive toward net-zero, insurers could other companies to address climate risk at the
help mitigate climate exposures through tweaking source as well as enhance scrutiny of climate
of existing policies and creation of new risk- transition plans.73 Multiple European carriers, for
transfer products. For example, more property instance, have become members of the Net-Zero
carriers could cover retrofitting with sustainable Insurance Alliance—a United Nations initiative
building materials, while additional auto insurers that brings together insurers from around the
might offer premium discounts to incentivize the world—emphasizing their role in the transition to a
use of electric vehicles.69 Insurers could also launch carbon-neutral economy, as well as in helping
new coverages and services mitigating physical and create a methodology allowing carriers to measure
transition risks for both emerging alternative emissions from underwriting and empowering
energy industries and legacy producers them to find ways to reduce them through
transitioning to more sustainable sources. 70
innovation.74
22
While US insurers have been working on focus on limiting the cause rather than just the
mitigation and adaptation efforts for quite some effect of climate risk.
time to limit the impact of climate risk, they have
generally lagged behind European counterparts in There are a number of steps insurers should
addressing the underlying source of greenhouse consider that could accelerate climate risk
gases and associated energy transition risks. This is mitigation across the value chain (figure 8), from
likely due to a lag until recently in US regulatory introducing new products, services, and premium
pressure and a less conducive domestic political incentives, to raising awareness and adding risk
environment.75 But increasing stakeholder management services.
demands on US carriers are now prompting more
FIGURE 8
How might insurers accelerate climate risk mitigation?
Create Promote climate mitigation products and risk management

Awareness services through marketing and distribution force
Test appetite for new products and risk management requirements
Explore transition challenges
Train staff on climate literacy
Provide
Incentives
Promote decarbonization efforts for
Climate risk policyholders via reduced premium costs
mitigation Support low-carbon technologies and
startups with customized coverages
Provide risk advisory services to improve clients’

Expand Risk climate mitigation understanding and approach
Mitigation Services
Create new risk-transfer offerings to enable capital flows
toward green solutions
Support sustainable decommissioning of
carbon-intensive assets
Develop solutions for reducing climate liability
and environmental litigation

23
Insurers pressed to move Insurers should be considering several internal

further, faster from words options to bolster DEI efforts and results (figure 9).
to deeds on diversity,
There are several existing programs insurers
equity, and inclusion (DEI) could join to enhance racially and ethnically
Since there is generally strength in numbers, some diverse recruitment efforts. The American
industry associations and individual carriers are Property Casualty Insurance Association, for
forming groups to address the social (“S”) example, collaborated with a number of carriers
challenges and increased focus on societal issues to create Insurance Apprenticeship USA, designed
within ESG. to attract, develop, and retain younger workers
and those from underserved communities into the
For example, the American Council of Life industry.79 The initiative was unveiled at the first
Insurers developed its Economic Empowerment & Women & Diversity: Expanding Opportunities in
Racial Equity Initiative, making diversity and Insurance conference.80
inclusion a priority for the industry by
emphasizing four key areas: 1) expanding access The Black Insurance Industry Collective, a
to affordable financial security in underserved nonprofit affiliated with The Institutes, was
markets, 2) advancing diversity and inclusion launched in 2020 to accelerate the advancement of
within companies and on corporate boards, 3) Black insurance professionals and increase
enhancing economic empowerment through representation of Black leaders at the executive
financial education, and 4) expanding level.81 In addition, UNI Europa Finance formed a
investments in underserved communities. 76
joint declaration with European insurers “to ensure
employees are treated equally, with respect and
External pressure emphasizing action over words is dignity—regardless of factors such as gender, age,
also mounting. The National Association of disability, and including LGBTQIA+, trans and
Insurance Commissioners created a Special (EX) intersex workers.”82
Committee on Race and Insurance to help
regulators keep track of progress and spur greater
action on DEI issues.77 Effective governance
framework should
While many insurers are taking steps to diversify
foster transparency
their workforce, large gaps remain in the industry
as a whole—particularly at the executive level. The World Economic Forum (WEF) recommends
21 core and 34 expanded ESG metrics and
Racially and ethnically diverse professionals disclosures around four interdependent pillars:
comprise approximately 24% of the industry’s Planet, People, Principles of Governance, and
entry-level workforce but only 8% of senior and Prosperity.83 On climate risk, insurers are being
executive management. And while there are more asked to adopt recommendations of the Task Force
women (approximately 57%) in entry-level ranks, on Climate-related Financial Disclosures, with a
just 12% of them are racially and ethnically diverse timeline of at most three years for full
women. Only 18% of the total senior and executive implementation, disclosing greenhouse gas
management positions are filled by women, and emission targets in line with goals of the Paris
only 3% of executives reporting to CEOs are Agreement. On human capital, insurers are advised
racially and ethnically diverse women.78
24
FIGURE 9
How might insurers make social equity a bigger part of their culture?
Organization culture Diversity in workforce/customers

• Appoint, resource, and empower Chief Diversity Officer • Products/services cater to the needs of the untapped
• Elevate scope to consider DEI in how business is run population segments such as low-income, female, etc.
• Laser focus on results and outcome • Recruitment efforts to tap minority groups based on race,
• Establish formal and consistent accountability gender identity, ethnicity, nationality, age, etc.
Inclusive approach Access to opportunities

• Welcome, value, and support all stakeholders • Empower to perform
• Encourage allyship in workplace, both in Social Equity • Leverage thinking of diverse groups
word and deed • Cross-team pollination of ideas
Breaking bias Voice in leadership

• Awareness programs/trainings to break stereotype biases at workplace • Increase representation of minority groups in senior
• Treat everyone with respect, without differentiation, and management/leadership positions
encourage full participation and contribution • Grooming future leaders through training and mentoring

on disclosure of workforce demographics by age, inconsistency in climate-related information from

ethnicity, gender, and other diversity indicators. financial market participants, and give sustainable
product providers a competitive boost.84
The Sustainable Finance Disclosure Rule—part of
the 2030 Agenda for Sustainable Development of The US Securities and Exchange Commission
the European Union and the United Nations—was (SEC) also proposed disclosure of Scope 1, 2, and 3
introduced to boost transparency surrounding greenhouse gas emissions, while advising carriers
sustainability claims made by financial market to put climate risk management teams in
participants and improve the market for leadership positions to provide oversight and
sustainable investment products. The EU directive guidance as well as uniform, consistent, and
aims to encourage about €1 trillion into green transparent public communication.85
investments over the next 10 years, address
25
“The regulator has social demands in ESG to strengthen human capital initiatives. We assess the
demands of ESG agencies through a corporate value enhancement lens. It is necessary to reduce the
burden on insurers by standardizing regulations and evaluation standards among stakeholders.”
— Ryosuke Fukushima, head of sustainability promotion division, Kampo
While external ESG ratings firms provide some Part of the problem is that the lack of
externally vetted transparency about insurer standardization among requests from ESG
actions and progress, as reporting responsibilities reporting agencies has been cited by insurers as
keep growing, the sheer volume of data requests often leading to duplication of effort and a waste
and behavioral examinations could overwhelm of limited resources.87 Insurers should be
relatively small insurer sustainability teams and stepping up efforts to establish more consistency
keep them from taking on more strategic roles. in such assessments, collaborating with other
Insurers should, therefore, consider empowering industries to bring about a common reporting
CSOs with more resources—both in terms of direct language and convergence in international
reports and ESG liaisons spread throughout the sustainability standards. Internally, insurers
organization—while including sustainability should be integrating new technology tools that
benchmarks in leadership performance evaluations automate ESG data collection and improve
considered when determining compensation and reporting efficiency.
promotions to establish greater accountability.86
“Sustainability is everybody’s responsibility. A mindset should be established so that everybody

in the organization aims to be an ESG champion. To accomplish this, ESG literacy programs have
been launched here . . . However, a top-down governance approach is also critical. It is important
to set up a sustainability governance committee and lay down a clear charter around ESG strategy,
tactics, and processes. There should be transparency in what is being planned and done, with results
measurable and achievable—and not just for regulatory purposes.”
— Francis Hyatt, chief sustainability officer, Liberty Mutual
26
M&A outlook: Activity slowing

from uncertain economy
G
LOBAL MERGER AND acquisition (M&A) continue to include managing general agents
activity remained robust through 2021, (MGAs), which are being pursued by both PE
with 418 completed deals in the insurance investors and strategic players, as an MGA
sector, up from 407 in 2020. However, largely
88
generally experiences margin accretion and has
due to lingering economic uncertainties,89 activity deeper reach into the insurance ecosystem.
involving insurance underwriters slowed in the
first quarter of 2022 with a total of 30 deals at an In the life insurance segment, players across all
aggregate value of US$12.09 billion compared to
90
regions are expected to continue to divest noncore
46 transactions at a combined value of US$22.72 books of business to redirect funds and bridge
billion in the first quarter of 2021.
91
gaps in core product offerings or upgrade
technology capabilities.95 Moreover, volatile
Deal volume involving insurance agents and markets are prompting sales of market-linked
brokers, however, rose to 427 in the first half of assets such as variable annuities. Prudential sold
2022, a 16% increase over the same period last year a US$31 billion block of legacy variable annuities
and 13% above the first-half five-year average, as to Fortitude Re for US$2.2 billion to help derisk
brokers looked beyond traditional M&A targets. 92
its portfolio.96 PE-backed aggregators are
Aggregators and PE firms continue to be some of increasingly investing in life insurer businesses to
the most active players as brokers tend to be easier grow their assets under management. For
to acquire, scale up, and sell in comparison to example, since July 2021, Blackstone announced
blocks of insurance business. Consolidation was
93
the US$2.8 billion acquisition of Allstate’s life
highest among small-and middle-market players in insurance unit,97 as well as a strategic partnership
the highly competitive market, commonly with low with American International Group (AIG) for a
bargaining power when dealing with insurers and 9.9% equity stake in its life and retirement
less talent to support diverse market needs. business for US$2.2 billion.98
Going forward, instability and uncertainty in the Despite a slowdown in investment, InsurTechs
global economic and political landscape is expected are likely to remain sought-after as investment
to drive the volume of cross-border deals lower, vehicles, partners, and for acquisitions. Life
making 2022 forecasts more challenging to predict. insurers challenged by legacy technologies may
look to acquire or align with InsurTech
Persistent high inflation this year is pressuring companies to accelerate digitization. In April
nonlife insurer profitability, which may prompt 2022, Munich Re US agreed to acquire Clareto, a
more carriers to expand via M&A into nonstandard medical record retrieval company to optimize
lines. In that same vein, M&A prospects will likely
94
life insurance underwriting.99
27
Going into 2023, insurers should be strategic shifts from “nice to have” to “must have,” insurers
in deciding which markets, products, and still challenged with implementation may consider
customers will be most beneficial to target partnerships and acquisitions outside of insurance
and reposition portfolios to unlock and to create a platform for their solutions. This may
redeploy capital, particularly in the turbulent align with new or renewed interest by adjacent
economic environment. financial services and technology giants with data
analytics capabilities to partner with insurance
In addition to pure acquisitions or divestures, incumbents and extend or expand their presence in
inorganic growth will potentially include other the marketplace.
forms of alliances. For example, as digitization
28
Finance outlook: New

accounting rules put public
insurers in the spotlight
T
HOSE RESPONSIBLE FOR managing insurer questions about the execution and impact of these
financials at public companies have spent five accounting changes from federal and state
years preparing for the long-anticipated regulators, rating agency and stock analysts, and
implementation of new accounting standards other external stakeholders.
covering long-duration contracts such as life
insurance and annuities. This was no simple or Additionally, the updated standards significantly
inexpensive task, as the industry will likely have increased collaboration between actuaries,
spent between US$15 billion and US$20 billion on accountants, and financial planning and analysis
finance transformation initiatives to adapt their professionals. Insurers should consider what
systems, according to a survey of 312 carriers from changes to their finance operating models,
50 countries by WTW.100 organizational structures, and talent models may
be necessary to execute the updated standards as
On January 1, 2023, International Financial efficiently as possible.
Reporting Standards (IFRS) 17 goes into effect,
determining how insurance contract assets and However, while IFRS 17 and LDTI requirements
liabilities are presented on balance sheets.101 While were catalysts for major finance system changes,
the United States is one of the few countries not to these investments should also serve as the
adopt IFRS 17, American carriers have been on a foundation for more comprehensive and proactive
parallel regulatory track, facing the same deadline transformation initiatives. Insurers should be
for implementing the US GAAP counterpart on turning their attention next year beyond regulatory
Long Duration Targeted Improvements (LDTI) compliance to enhanced data management and
rules promulgated by the Financial Accounting utilization capabilities that ultimately generate
Standards Board. 102
Insurers with both US and greater insights and improved performance.
global operations have had to manage
implementation of both simultaneously. For example, many carriers moved their ledgers to
the cloud to make data more accessible for
Insurers should have most, if not all, elements in collection and reporting. But after that relatively
place by now to comply. Tweaks will likely be modest goal is accomplished, the challenge ahead
necessary both during fourth-quarter testing and will likely be how to make data in general more
after the January 1 launch, but the tech and actionable for innovation and growth through
process infrastructure has likely already been laid. advanced analytics and artificial intelligence across
For the moment, insurers should be focused on the enterprise.103
assembling their data and narrative to address
29
Keep in mind that nonpublic insurers—such as Insurance tax departments should be proactive and
mutuals and carriers owned by private equity—are invest early in analysis and modeling exercises to
not due to be in compliance until January 2025. assess the impact of potential tax reform. Given the
Such carriers will likely benefit from lessons complexity and significance of these coordinated
learned by public companies on their IFRS/LDTI worldwide changes, reliable tax models will likely
journey. They should already be moving to lock in call for the aggregation of new and detailed data—
those trained and experienced resources becoming much of which may not be currently collected and
available now that preparation for public readily available. These trends toward tax
companies is nearing completion, to help guide complexity and the recurring tax talent gap should
nonpublic insurers in finance transformation and prompt insurers to continuously assess their
regulatory implementation. department operating models.
Looking ahead, the next big reporting challenge In addition, insurance tax departments should
for finance departments is likely to be increasing remain close to their business units, so they are
demands for information about ESG issues—from prepared to respond to legislative and regulatory
climate risk in underwriting and investments, to developments prompted by economic uncertainty
diversity and inclusion in staffing and leadership, and changing marketplace landscapes. For
to financial equity in coverage availability instance, insurers should be closely monitoring the
and pricing. impact of rising interest rates on their company’s
investment portfolios, while considering tax
In this case, pressure for more data is coming from planning opportunities and risks for potential
multiple sources—both governmental and private investment losses.
agencies. Yet, unlike with accounting changes,
standards are lacking among nations and ESG Another example of uncertainty is the future tax
assessment firms, often creating duplication of treatment of cryptocurrencies. Insurers investing
effort, additional time and costs, and confusion. in the digital asset market or accepting premiums
in such alternative currencies should be
anticipating and managing tax risks of widely
What’s next for insurance fluctuating crypto value, in part by complying with
tax leaders? various jurisdictional tax regimes and closely
monitoring upcoming legal and
Moving forward, insurance tax departments should regulatory developments.
remain vigilant and be prepared for the uncertainty
posed by the potential for global tax reform, such Meanwhile, with many carriers already developing
as Pillars 1 and 2 put forth by the Organisation for ESG-targeted strategies, this may be an
Economic Co-operation and Development (OECD). opportunity for insurers to assess their tax
Further, US tax reform will likely be needed to footprint and strategy, as well as articulate a
conform with these global tax changes. Specifically, narrative for their client base and regulators.
OECD Pillar 2 introduces a global minimum tax Insurance company tax departments should stay
based on book income with a number of close to the business initiatives being planned and
tax adjustments. implemented, as various countries may continue to
introduce tax-specific ESG reporting measures.
30
The final frontier: Changing

culture as the ultimate
enterprise transformation
T
HERE WILL LIKELY be plenty of “difficult energy risks covered in a global economy still
situations” in the year and decade ahead— heavily dependent on fossil fuels even while
hopefully not as overarching as a global facilitating and accelerating the transition to more
pandemic, but challenging, nevertheless. Yet that sustainable sources.
shouldn’t prompt insurers to be overly cautious or
react defensively. Instead, they should seek to Internally, many insurers have already invested
maintain the entrepreneurial, can-do mindset heavily to enhance legacy operations with a host of
often displayed during the COVID-19 outbreak, new technologies and data sources, while boosting
which helped them nimbly transform fundamental the capabilities of their people to take full
aspects of their operations for a more digital and advantage of these upgrades. The shift from laying
virtual economy. this new foundation to fulfilling its potential is
likely to remain a major challenge in the coming
If insurers were able to adapt and innovate so years, deserving of ongoing attention
quickly and effectively under such crisis conditions, and investment.
what might be preventing them from doing so on
an ongoing basis? Rather than falling back on pre- However, to fully transform into the insurer of the
pandemic operating procedures and business future, carriers should also strive to keep evolving
models, insurers should keep experimenting with their foundational culture—from a focus on risk
new ways of providing coverage and serving reduction to one marked by risk-taking innovation
customers. They should remain on offense by and broader, bolder reinvention.
positioning to thrive over the long term in a rapidly
evolving, more socially aware market. As evolution in society, technology, and the global
economy continues to speed up, insurers that can
One path could be striving to engage more keep pace and maintain a commitment to
proactively and collaboratively with those in transformative change will likely be among those
underserved communities as customers and best positioned to excel against slower-to-adapt
employees, managers, and senior leadership. legacy carriers as well as new forms of competition
Another could be balancing the need to keep legacy already here and yet to emerge.
31
Endnotes
1. “Sigma 4/2022, World insurance: inflation risks front and centre", Swiss Re.
2. Allianz Research, Allianz Global Insurance Report: A decisive decade, May 24, 2022.
3. Ibid.
4. Marsh, Global Insurance Market Index Q2 2022 – Global insurance markets: Moderation in pricing
increases continues, 2022.
5. Verisk and American Property Casualty Insurance Association (APCIA), “Property and casualty insurers
experience underwriting loss in 2021, but remain strong,” press release, May 26, 2022.
6. Insurance Information Institute and Milliman, “Expect loss pressures to continue in the P&C industry due to
inflation, supply chain, and riskier driver behavior, new Triple-I/Milliman report shows,” press release,
May 12, 2022.
7. Insurance Information Institute, “Social inflation: Hard to measure, important to understand,” July 17, 2022.
8. Verisk and APICIA, “Property and casualty insurers experience underwriting loss in 2021, but remain strong.”
9. Tim Zawacki, “US P&C Insurance Market Report: Inflation to push combined ratio past 100%,” S&P Global
Market Intelligence, June 29, 2022.
10. Matthew Lerner, "Inflation hits property catastrophe reinsurance renewals,” Business Insurance, June 7, 2022.
11. Luke Gallin, “77% expect some carriers will fail to obtain sufficient reinsurance at June 1: Survey,” Reinsurance
News, May 26, 2022.
12. Guidewire Software, Inc., Are insurers moving with changing times and tastes? The 2022 State of the
UK Insurance Customer Attitudes Study, June 22, 2022.
13. Kelly Cusick and Sam Friedman, How to reinvent the small-business insurance market for a digital economy,
Deloitte Insights, March 31, 2022.
14. Howden, “Ukraine war and cyber resilience combine to temper global ransomware activity,” June 6, 2022.
15. LIIBA, “Net zero opportunity big enough to double size of London market, says LIIBA,” press release,
May 2, 2022.
16. Ibid.
17. Neal E. Boudette, Cade Metz, and Jack Ewing, “Tesla Autopilot and other driver-assist systems linked to
hundreds of crashes,” New York Times, June 15, 2022.
18. Holden Benon, “Exploring split usage-based insurance for autonomous vehicles,” NU Property Casualty 360º,
June 16, 2022.
19. Robin Merttens, Insurance: To embed, or not to embed, InsTech London, June 2021.
20. Kevin Kalinich, “Commercial clients short on intangible-asset insurance,” NU Property Casualty 360º,
June 13, 2022.
21. Britt Van Dalen, Kelly Cusick, and Andy Ferris, The rise of the exponential underwriter, Deloitte Insights,
February 24, 2021.
22. Michael Cline and Kedar Kamalapurkar, Preserving the human touch in insurance claims transformations,
Deloitte Insights, October 12, 2021.
32
24. Ibid.
25. Michelle Canaan and Puneet Kakar, Financial inclusion and the underserved life insurance market, part two,
Deloitte Insights, March 23, 2022.
26. Ibid.
27. “Sigma 5/2021, Turbulence after life-off: Global economic and insurance market outlook 2022/2023", Swiss Re.
28. Michelle Canaan and Puneet Kakar, “Financial inclusion and the underserved life insurance market,
part two: Closing the US coverage gap to drive growth and bolster DEI,” Deloitte Insights, March 23, 2022.
29. InsuranceNewsNet, “Life insurance outlook is stable for 2022 as recovery continues,” press release,
December 1, 2021.
30. Fitch Ratings, Fitch ratings 2022 outlook: U.S. life insurance, December 7, 2021.
31. InsuranceNewsNet, “Life insurance outlook is stable for 2022 as recovery continues.”
32. Nichola Saminather, “Manulife, Sun Life say they are raising premiums to offset cost inflation,”
Reuters, February 10, 2022.
34. Observations and commentary collected by the Deloitte Center for Financial Services during
conversations with insurance industry executives, May–June 2022.
35. Jim Molis, “Employers are doing a checkup on their employee dental benefits,” Phoenix Business Journal,
December 7, 2021.
36. Denise Garth, David Schmitz, Abhishek Bakre, and Abhishek Chowdhury, The new reality and future of group and
voluntary benefits, Majesco and Deloitte, October 2021.
37. Guardian Life, Digital overdrive: The market is ready for the next milestone in benefits technology
innovation, January 2021.
38. National Conference of State Legislatures (NCSL), “State Family and Medical Leave Laws,” July 13, 2022.
40. Deloitte, “Deloitte’s group insurance broker sentiment survey,” August 27, 2021.
41. US Bureau of Labor Statistics, “Number of people 75 and older in the labor force is expected to grow
96.5 percent by 2030,” Economics Daily, November 4, 2021.
42. Mikaela Parrick, “Attracting millennials to the insurance industry: A complete guide,” Brown & Joseph,
December 9, 2018.
43. Aviva, “Gender divisions in work life beyond the pandemic,” press release, July 12, 2021.
44. Swiss Re, “Swiss Re GBS India signs MoU with IIRM to enhance capability building programs in India’s
insurance industry,” press release, June 29, 2022.
45. Zurich, “Part-time hires double since launch of flexible work initiative,” press release, January 7, 2022.
46. Enoch Yiu, “Flight attendants laid off during pandemic find new career as high-flyers in Hong Kong SAR's
booming insurance industry,” South China Morning Post, February 15, 2021.
33
47. Alison Griffin, “Talent transfer: Behind Prudential’s push for internal re-skilling and upward mobility,”
Forbes, May 18, 2021.
48. Anna Beninger, “The future of work: How the insurance industry needs to shift its thinking to attract
diverse talent,” AXA XL, June 8, 2022.
49. Interview with Jen Warne, executive vice president, chief people officer, Lincoln Financial Group, by the
Deloitte Center for Financial Services, June 17, 2022.
50. Interview with Sonia Boyle, chief people officer, Gore Mutual Insurance, by Deloitte Center for Financial
Services, June 10, 2022.
52. Ibid.
53. Ibid.
54. Joanna England, “Why customer centricity is driving insurtech growth,” InsurTech Digital, May 2, 2022.
55. Venture Scanner data, analyzed by Deloitte Center for Financial Services, accessed July 1, 2022.
56. Cindy MacFarlane, Sam Friedman, and Namrata Sharma, How to walk the talk by treating insurer
data as a strategic asset, Deloitte Insights, July 26, 2022.
57. David Schatsky, “Are you low-code yet? Your competition likely is,” CIO Journal, October 2, 2020.
58. CoverGo, “XN Worldwide Insurance adopts the CoverGo platform to streamline their insurance
ecosystem,” press release, October 6, 2021.
59. Observations and commentary collected by Deloitte Center for Financial Services during conversations
with insurance industry executives, May–June 2022.
60. Brian Campbell, Nicholas Merizzi, and Diana Kearns-Manolatos, The industry cloud opportunity,
Deloitte Insights, February 10, 2022.
61. Jeff Loucks, Tom Davenport, and David Schatsky, State of AI in the enterprise, 2nd edition,
Deloitte Insights, 2018.
62. Alex Tolsma, “GDPR and the impact on cloud computing,” Deloitte, June 24, 2022.
63. David Sherwood, Kristen Sullivan, and Sam Friedman, Building a more sustainable insurance industry,
Deloitte Insights, August 3, 2021.
64. Monica O’Reilly, Dounia Senawi, Jim Eckenrode, and Eamonn Kelly, A higher bottom line: The future of financial
services, Deloitte, May 2021.
65. Amy Cortese and Isaac Silk, “Biodiversity is the new climate change,” ImpactAlpha, February 4, 2021.
66. Punit Renjen, “2022 CxO sustainability report: the disconnect between ambition and impact,”
Deloitte, January 20, 2022.
67. Intergovernmental Panel on Climate Change (IPCC), “Summary for policymakers of the IPCC special
report on global warming,” 2019.
68. Paola A. Yanguas Parra et al., Global and regional coal phase-out requirements of the Paris
Agreement: Insights from the IPCC Special Report on 1.5º C, Climate Analytics, September 2019.
69. Neal Baumann, Greg Lowe, David Rush, et al, Climate product innovation within the insurance
sector (Cambridge, UK: Cambridge Institute for Sustainability Leadership, 2021).
34
70. Ibid.
71. Swiss Re, SONAR 2020: New emerging risk insights, June 2022; Elena Logutenkova, "Carbon capture and storage
- Emerging risk or opportunity?" Swiss Re Insights, August 21, 2020.
72. Aviva, “Aviva becomes the first major insurer worldwide to target Net Zero carbon by 2040,” press release,
March 1, 2021.
73. Joey Galloway, Rohit Sharma, and Greg Lowe, “Insuring the transition: Getting started on the journey to Net Zero
Underwriting,” Deloitte Financial Services Blog, July 5, 2022.
74. UN Environment Program Finance Initiative, “Net-Zero Insurance Alliance,” July 2021.
75. Russ Banham, “ESG in insurance underwriting: European insurers lead the way,” Carrier Management,
February 3, 2021.
76. American Council of Life (ACLI), “American Council of Life Insurers steps forward with industry leadership
initiative for economic empowerment and racial equity,” press release, October 12, 2020.
77. National Association of Insurance Commissioners (NAIC), “NAIC announces special committee on race
and insurance,” press release, July 23, 2020.
78. Irma Reboso Solares, “Insurance industry leads on DEI initiatives,” Carlton Fields, January 11, 2022.
79. APCIA, “APCIA launches ‘Insurance Apprenticeship USA’ to expand opportunities in the insurance sector,”
press release, March 2, 2020.
80. Ibid.
81. Black Insurance Industry Collective (BIIC), “New industry initiative launches to advance racial diversity
and equity: Black Insurance Industry Collective to expand leadership development for Black professionals,”
press release, April 27, 2022.
82. European Agency for Safety and Health at Work, “Diversity, inclusion and non-discrimination for Europe’s
insurance workers,” March 8, 2022.
83. World Economic Forum (WEF), “Global business leaders support ESG convergence by committing to
Stakeholder Capitalism Metrics,” news release, January 26, 2021.
84. Cary Springfield, “What is the Sustainable Finance Disclosure Regulation?,” International Banker,
April 13, 2021.
85. Russ Banham, “Insurers brace for SEC climate risk disclosure rules,” Carrier Management, June 28, 2022.
86. Sherwood, Sullivan, and Friedman, Building a more sustainable insurance industry.
87. Ibid.
88. Surina Nath, “What to expect from insurance M&A in 2022 – Clyde & Co report,” Insurance Business,
March 14, 2022.
89. Observations and commentary collected by the Deloitte Center for Financial Services during conversations
with insurance industry executives, May–June 2022.
90. Komal Nadeem and Husain Rupawala, “M&A volume dips YOY across insurance industry in Q1,” S&P
Global Market Intelligence, April 5, 2022.
91. Ibid.
92. Gavin Souter, “Broker acquisitions keep rolling in 2022 first half,” Business Insurance, July 18, 2022.
35
93. Nadeem and Rupawala, “M&A volume dips YOY across insurance industry in Q1.”
94. Mark Purowitz, Douglas Sweeney, and Ian Sparshott, 2022 insurance M&A outlook: Riding the wave,
Deloitte, 2021.
95. Ibid.
96. Prudential, “Prudential Financial to sell $31B PALAC block of legacy variable annuities to Fortitude Re,”
press release, September 15, 2021.
97. Allstate, “Allstate announces agreement to sell Allstate Life Insurance Company,” press release,
January 26, 2021.
98. AIG, “AIG and Blackstone close transaction relating to Life & Retirement business,” press release,
November 2, 2021.
99. Allison Bell, “Munich Re agrees to acquire Clareto,” ThinkAdvisor, April 13, 2022.
100. WTW, "Global insurance industry faces IFRS 17 costs estimated at US$15 to US$20 billion,” press release,
June 7, 2021.
101. Deloitte Global, “International Accounting Standards Board: About the IASB,” accessed August 9, 2022.
102. Deloitte Consulting LLP, “What lies ahead on your LDTI journey?,” accessed August 9, 2022.
103. Cindy MacFarlane, Sam Friedman, and Namrata Sharma, How to walk the talk by treating insurer data as a
strategic asset.
36
Acknowledgments
This report was researched and coauthored by Namrata Sharma and Dishank Jain.
The Center would like to thank the Deloitte professionals who provided additional insights and
perspectives in the development of this outlook in the following areas:
US leaders
• Karl Hersch (US national sector leader/Consulting leader)
• Rich Godfrey (Advisory)
• Joe DeSantis (Audit)
• Doug Welch (Life insurance)
• Mark Yoest (Group insurance)
• Chris Albert and Chris Puglia (Tax)
• Kelly Cusick (P&C insurance)
• David Sherwood (Regulatory/ESG)
Global leaders
• Karl Hersch (US national sector leader)
• Neal Baumann (Global Financial Services Industry leader)
• Claude Chassain (France)
• Andy Masters (UK)
• James Colaco (Canada)
• Tim Pagett (APAC)
• Holger Froemer (Japan)
• Arthur Calipo (Australia)
Regional subject matter specialists

• Joerg Guenther (Germany)
• Simon Walpole (Switzerland)
• Eric Meistermann (France)
• Kurt Mitzner (Germany)
• Andreas Poggi (Italy)
37
Subject matter specialists

• Nonlife insurance: Kelly Cusick, Mark Patterson, Jordan Kuperschmid, Johal Gurpreet
• Life insurance: Kevin Sharps, Doug Welch, Puneet Kakar
• Group insurance: Mark Yoest, Abhishek Bakre
• Talent: Nicole Holger, Jeff Goodwin, Anna Nowshad (FoW), Tina Whitney, Andy Liakopoulos,
Nicole Scoble-Williams (FoW), Holger Jens Roger Froemer (FoW)
• Technology: Arun Prasad, Missy Goldberg, Pil Chung, Matt Cahill, Subhasis Mukherjee, Ranjit
Bawa, Ashish Agarwal, Anshul Chopra, Akash Ayal, Daniel Soo
• ESG: Cristina Brodzik, David Sherwood, Joe Guastella, Kristen Sullivan, Greg Lowe,
Rohit Sharma
• Mergers & acquisitions: Doug Sweeney, Mark Purowitz
• Finance transformation: Wallace Nuttycombe, Bryan Benjamin, Jay Coue, Stephen Keane
• Tax: Chris Albert, Eli Katz
38
About the authors
Karl Hersch | [email protected]
Karl Hersch is Deloitte’s US Insurance leader responsible for leading the firm’s overall insurance sector
strategy and bringing the firm’s practice areas together to serve Deloitte’s portfolio of insurance clients.
Throughout his 30-year career, Hersch has served the financial services and insurance industries
extensively, providing him with a well-rounded understanding of the most complex and critical issues
clients face. He has experience working across Deloitte’s Audit, Advisory, and Consulting businesses
and served as the Insurance Finance Transformation practice leader and the FSI Enterprise
Performance practice leader.
Neal Baumann | [email protected]
Neal Baumann leads Deloitte’s Global Financial Services Industry practice. He has 20 years of
experience advising financial services and insurance company clients on corporate and competitive
strategies across industry segments, including life insurance, wealth management and premium
financial services, investment and funds management, superannuation and pensions, and retail
banking. Baumann has had advisory and consulting roles in the United States, Australia, New Zealand,
United Kingdom, and across Asia.
Michelle Canaan | [email protected]
Michelle Canaan is a manager in the Deloitte Center for Financial Services. As a subject matter
specialist for the insurance industry, she produces thought leadership on current and future trends,
including strategies and solutions for Deloitte’s clients.
Sam Friedman | [email protected]
Sam Friedman is a senior manager and the insurance research leader at the Deloitte Center for
Financial Services. He joined Deloitte in 2010 after a long career as a leading financial journalist and
commentator. He is a frequent contributor to Deloitte Insights, including studies on market strategy,
technology and innovation, cybersecurity, operational transformation, and human capital.
39
Contact us
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Financial Services Industry leader FSI National Audit & Assurance leader
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Industry leadership
Karl Hersch
US Insurance leader
Principal | Deloitte Consulting LLP
+1 973 602 5252 | [email protected]
Karl Hersch is Deloitte’s US Insurance leader responsible for leading the firm’s overall insurance sector
strategy, bringing the firm’s practice areas together to serve Deloitte’s portfolio of insurance clients.
Neal Baumann
Global Financial Services Industry leader
Principal | Deloitte Consulting LLP
Deloitte Center for Financial Services
Jim Eckenrode
Managing director | The Deloitte Center for Financial Services
Deloitte Services LP
Jim Eckenrode is managing director at the Deloitte Center for Financial Services, responsible for
developing and executing Deloitte’s research agenda, while providing insights to leading financial
institutions on business and technology strategy.
Sam Friedman
Senior manager | The Deloitte Center for Financial Services
Deloitte Services LP
41
Deloitte China Center for Financial Services
The Deloitte China Center for Financial Services is the think tank for our Financial Services Industry
Program in China, providing professional industry insights and research support to financial
institutions in different arenas, including banking & capital markets, insurance and investment
management.
As the core research capability dedicated to the financial services industry, we bring together the
findings and insights of financial services industry thought leaders from across the Deloitte global
network, sharing our perspectives on key issues including macro policy, industry trends and business
management.
Charlotte Shen
Deloitte China Center for Financial Services leader | Partner, FSI Audit & Assurance |Deloitte China
+86 21 2312 7166 | [email protected]
Lawrence Chen
Partner, Deloitte China Center for Financial Services | Deloitte China
+86 10 8512 4058 | [email protected]
Annie Zhou
Senior manager, Deloitte China Center for Financial Services | Deloitte China
+86 10 8512 5843 | [email protected]
42
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A report from the

Deloitte Center for Financial Services

2023 insurance outlook

Deloitte Insurance Services

Insurers should be pivoting to longer-term reinvention 3

Inflation challenging nonlife insurer profitability even while boosting

Life carrier transformation likely key to sustainable growth 8

Group insurers get innovative amid shifting dynamics 10

Human capital outlook: Insurers reinvent workplace strategies and

Technology outlook: Moving from infrastructure investment to

Sustainability outlook: Insurers should set sights beyond compliance

M&A outlook: Activity slowing from uncertain economy 27

Finance outlook: New accounting rules put public insurers in

The final frontier: Changing culture as the ultimate enterprise

• However, insurers that effectively transitioned during the pandemic to a remote

Insurers should be pivoting

Instead, carriers should be building upon the virtual client engagement

Prices, premium volume are soaring across commercial lines

2022 prices/premiums 2021 specialty Lloyd’s 2021

• Q2 global prices up 9% • US excess-surplus lines premium • Gross written premiums up

Deloitte Insights | deloitte.com/insights

Life carrier transformation

Source: Sigma 4/2022, "World insurance: inﬂation risks

Group insurers get innovative

Human capital outlook:

Change in employee expectations has pushed the “good to have” parameters

Role and responsibilities

Source: Deloitte analysis.

Culture shifts could create a potentially irresistible work experience

Pride in workplace Flexibility

New hire acclimation Broad-based hiring

Source: Deloitte analysis.

Essential employees Full work

Targeting more days Targeting more days at

Source: Deloitte analysis.

­— Brigid Pelino, senior VP & chief human resources officer, Definity

­— Sonia Boyle, chief people officer, Gore Mutual Insurance

­— Jana Fallon, VP staffing and executive assessment, Prudential Japan

While InsurTech investment slowed considerably in the ﬁrst half of 2022, it is

Commercial insurance Insurance customer acquisition Insurance operations

2022 (through H1)

Sources: Venture Scanner data as of July 1, 2022; Deloitte analysis.

What should a cloud-native architecture look like for insurers?

Application layer Potential advantages of cloud-native system

Data and Distribution • Applications are modular—easily plugged in and

• Data from multiple internal and external sources is

• Industry cloud providers contextualize the

Underlying cloud infrastructure • Hyperscalers provide underlying cloud

Source: Deloitte analysis.

­— Sarah Chapman, global chief sustainability officer, Manulife66

How might insurers accelerate climate risk mitigation?

Create Promote climate mitigation products and risk management

Provide risk advisory services to improve clients’

Source: Deloitte analysis.

Insurers pressed to move Insurers should be considering several internal

Organization culture Diversity in workforce/customers

Inclusive approach Access to opportunities

Breaking bias Voice in leadership

Source: Deloitte analysis.

Insurers should be pivoting to longer-term reinvention 3

Life carrier transformation likely key to sustainable growth 8

Group insurers get innovative amid shifting dynamics 10

M&A outlook: Activity slowing from uncertain economy 27

— Brigid Pelino, senior VP & chief human resources officer, Definity

— Sonia Boyle, chief people officer, Gore Mutual Insurance

— Jana Fallon, VP staffing and executive assessment, Prudential Japan

— Sarah Chapman, global chief sustainability officer, Manulife66

— Ryosuke Fukushima, head of sustainability promotion division, Kampo

— Francis Hyatt, chief sustainability officer, Liberty Mutual