New Business Models Are Needed

The pressures the insurance industry is facing seem to keep coming like an unending stream of tsunamis, beginning with changing customer expectations with millennials and Gen Z and gathering momentum with blurring industry boundaries and the wave of insurtech startups. The ability of the industry to invest large sums of money into creating opposing forces to fight these tsunamis is withering due to a triple whammy … the triad:

• Increased claims costs
• Soft market
• Operational costs that challenge the existing business models

2017 turned out to be a record-breaking year of major catastrophes, including wildfires, hailstorms, flooding, snowstorms and hurricanes, to name a few. It has been reported that, in the U.S. alone, there was $306 billion in total damage in 2017, with 16 events that caused more than $1 billion in damage each. Much of this would be reinsured by the London market or reinsurers. The financial impact is being felt in profitability and the potential for increased risk that needs to be addressed. Read more