Shaken up by new risk factors over the past two years (global warming, international geopolitics, cybersecurity), the insurance world must adapt to face new challenges in 2024. In this article, we take a look at the 5 main challenges identified by our expert team.
1- Integrating climate and geopolitical risks into the insurance industry
The climate, strongly impacted by global warming and in particular the recent scorching summers, is creating a whole new set of factors for the insurance industry to take into account: drought, hail and, more recently, storms are all risks that are multiplying. There are more climatic events than ever before, and their impact is greater than ever before. This raises a number of issues, not least the role of the Cat Nat (natural catastrophe) regime, which is changing the parameters of pricing and coverage for members. These risks are driving up the cost of managing weather-related claims, and there is every reason to believe that this state of affairs will only worsen in the years to come.
At the same time, the unstable international geopolitical situation (conflicts in Ukraine and Palestine) is having an impact on European economies, and consequently on the regulations and constraints of insurance companies.
Our expert Julien Bromberger, confirms: " Couple that with rising inflation and the war in Ukraine, and you get a cocktail that is of great concern to our customers."
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2- Handling cyber-attacks
With the estimated cost of successful cyber attacks on French organizations' information systems reaching 2 billion euros in 2022(according to a study by Asteres), this will certainly be a major issue for insurers in 2024. Indeed, the central question surrounding security remains the same: who should pay? Hosters, integrators and maintenance services pass the buck to avoid bearing these impressive costs, and insurance seems poised to become the financial safety net for these attacks. We'll have to keep an eye on this as legislation is slow to tackle this social issue.
Also read: Risk management and cyber security: how do you go about it?
3- Risk management and claims experience for property-casualty insurance in 2024
IARD (Incendies, Accidents et Risques Divers - Fire, Accidents and Miscellaneous Risks) insurance covers property such as cars, houses and personal belongings. Unlike life insurance or mutual insurance, they are not designed to protect an individual. This type of insurance will be a major issue for our customers in 2024, for a number of reasons. Taking cars as an example, our expert Isabelle Arnaud explains: " Vehicles are becoming safer and safer, of course, but they're also becoming more and more expensive to repair. These are factors that are of course taken into account by our customers and the insurance industry. Accidentology is changing. Perhaps fewer accidents, but more costly. All our customers' problems are to ensure that their insurance premiums are in line with the risk of accidents ". In addition, and to back up his words, an article on the auto-infos.fr blog tells us that the average price of a car in France in 2023 will be €35,118, i.e. 8% more than last year and almost 10% more than the year before. An important factor to keep an eye on in 2024.
4- Risk prevention and regulations
The insurance sector has been one of the hardest hit by inflation in recent years, and this will continue in 2024. Indeed, insurance organizations are concerned about the evolution of risks, as we have already mentioned, not only in terms of climate and geopolitics, but also in terms of health and personal protection. Regulatory changes are numerous (notably 100% health), involving the transfer of many costs from compulsory to supplementary schemes, and casting doubt on the profitability of the insurance business. This raises the question of risk prevention, in line with the adage "Preventing for a better cure", which will clearly be one of the sector's key drivers of profitability in 2024.
Read also: The consulting expectations of tomorrow's businesses.
5- Transformation of the sector: 2024, the insurance revival?
With these first four challenges in mind, it remains for insurance companies, as in recent years, to continue transforming themselves in order to get ever closer to their customers' needs. As Julien Bromberger confirms: "That doesn't stop them from wanting to transform themselves, and to be ever closer to their users, members and customers. What does more proximity mean? A study by Deloitte points to a customer-focused transformation and the adoption of advanced technologies. It also heralds a change in corporate culture to minimize siloed interactions, improve collaboration between employees and increase the accessibility of customer data.
Read also: Agility trends in 2023
To find out more about the challenges facing the insurance industry and to talk to our teams, please contact us. To find out more about our Business Unit Blue Soft Consulting, visit our dedicated page.
