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Short insights on topics that matter to leaders in the global insurance industry.

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Behavioral science in insurance—nudges improve decision making

It’s a common problem: we know what’s good for us, but we don’t always do it. (How many people really use their gym membership?) This kind of counterintuitive behavior is often due to poor “choice architecture”—the context in which people make decisions. Choice architecture involves the medium and sequence in which information is presented, how our actions compare with those of our peers, and so forth. Poor choice architecture can foster unfavorable behaviors, ...

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Italian insurance: Achieving scale in advanced analytics

Before the COVID-19 pandemic, the McKinsey Global Institute estimated that artificial intelligence and advanced analytics (AA)1 could create $1.1 trillion in value for the insurance industry, representing almost 17 percent of the industry’s current total global revenues. The importance of AA is likely to increase in the postcrisis environment. Indeed, many people expect to use digital services more in the aftermath of COVID-19, and businesses such as banks will demand more advanced ...

Industrializing data and analytics among Asian insurers

In recent years, Asian insurers have increasingly turned to data and analytics tools to drive growth and improve operational efficiency. Many have already invested in starting up analytics teams or setting up insurtech partnerships to launch pilots. To date, some of the most popular use cases revolve around increasing new business by suggesting the next product to buy, improving claim-fraud detection, and increasing the straight-through processing rate of new life insurance policies ...

How Asian insurers can build a digitally enabled hybrid distribution model

The COVID-19 outbreak is disrupting the insurance distribution model. The agency channel in particular is under pressure, as face-to-face meetings between agents and customers are not possible for the foreseeable future. While countries are beginning to loosen physical distancing requirements, the pandemic’s effects on the insurance distribution model are likely to last. Specifically, the outbreak has accelerated movement toward a digitally enabled hybrid model of distribution, in which ...

Infusing tech talent into the UK insurance industry

A landmark report from the McKinsey Global Institute warned that demand for workers with technology skills would rise by 55 percent from 2016 to 2030 (PDF). In the insurance industry, the growth in demand has already had an impact on back-office roles, especially contact centers. The need for employees with technology skills will only increase in these and other functions, including claims and actuarial roles, frontline sales, and underwriting. While insurance leaders have accepted the ...

Charitable giving in the US insurance industry

McKinsey’s Insurance Practice has partnered with the Insurance Industry Charitable Foundation to assess the state of charitable giving in the American insurance industry. A follow-up to the foundation’s previous work in 2011 and 2015, the goal of this research was to identify trends in charitable giving and to highlight opportunities for the industry to achieve greater impact through giving. In 2019, the survey was expanded to include responses from life insurance and ...

Ecosystems in insurance: The next frontier for enhancing productivity

Insurers have a productivity challenge. Recent McKinsey research found the insurance industry has struggled for years to achieve productivity gains at scale, particularly compared with other industries. In addition, the spread in operating costs between the highest and lowest performers in both P&C and life has substantially increased over the past decade. While four categories of levers—functional excellence, structural simplification, busi­ness transformation, and enterprise ...

Catch up on the best insights: Top five insurance articles on McKinsey.com

The five most-read insurance articles of 2019 include perspectives on the future of claims and underwriting, the digital transformation of the bancassurance channel, and how insurers can benefit from the Internet of Things. From art to science: The future of underwriting in commercial P&C insurance Underwriting is essential to performance excellence. Today’s insurance carriers must evolve their role to meet the industry and customer needs of tomorrow. What do leading players have in ...

A view from the Pacific Insurance Conference: How to create a successful insurance ecosystem

The Pacific Insurance Conference in Hong Kong is one of the most important events in the Asian insurance industry calendar, and the 29th edition saw more than 300 insurance executives gather to debate, discuss, and explore the industry’s future. One of the hottest topics was the rise of ecosystems. This trend is driven by changing customer expectations and technology innovations, and it is impacting many industries. Insurance is no exception (Exhibit 1). To understand the importance of a ...

Renewing the life insurance proposition in a low interest rate environment

After nearly half a decade of ten-year Bund yields below 1 percent, and about six months of negative ten-year yields across most of continental Europe, the expectation of continued extremely low interest rates poses major challenges for life insurance companies in Europe and—to varying extents—around the world. The impact will be multifold: financial revenues will decline across products, the capital requirements of guarantees will skyrocket, and the value proposition of life ...

Note to the CEO: Our perspective on the European life insurance closed-book market

The profitability of European life insurers is under pressure. Major challenges involve shrinking investment returns from an ultra-low interest environment, increased capital requirements from Solvency II on traditional (guaranteed) products, and unaddressed structural cost challenges. Life insurance carriers must consider all levers to address these challenges. Especially for those trapped in a position of idle growth, one promising strategy is to transfer unprofitable closed books to ...

IFRS 17: Insurers should plan for strategic challenges now

Insurers subject to the International Financial Reporting Standards (IFRS) are preparing to implement IFRS 17, which will replace IFRS 4 in January 2022. As a result, the entire organization beyond the finance function will be affected by the new standard’s far-reaching strategic implications. Insurers will need to review their strategies to ensure they are adapted to the post–Solvency II world. Areas of focus should include the product and investment portfolio, asset and liability ...

The how of digital and analytics in insurance

Insurance executives are acutely aware of the need to imbue their company with digital and analytics capabilities. They know why they need to pursue digital capabilities, and most of them have also started figuring out what they need to do, but how to do so—that’s the rub. Do they embark on a sweeping digital transformation from the top down? Develop digital or analytics use case pilots that build into a tidal wave of change? Pursue a new digital attacker business model? Do they ...

Direct insurance was set to disrupt the industry: What went wrong?

Direct insurers evolved their sales approach from purely mail- and phone-based to online purchasing in just a few decades. In Europe, direct premiums sharply increased to about €15 billion in sales by 2009. This momentum led to high expectations that direct insurers would capture a large percentage of premiums and substantially disrupt the industry. But ten years later, the reality is different: the share of all direct premiums represents only a single-digit percentage of the market. We ...

Gender parity is still a problem in insurance: Here’s what leaders can do

Women are still underrepresented in insurance company leadership positions. Yet most men, and a surprising number of women, don’t believe gender parity in leadership is an issue. According to the 2018 McKinsey and LeanIn.Org study on Women in the Workplace, 33 percent of women and nearly 50 percent of men across industries believe that 1 in 10 women in a senior leadership team is pretty good representation1 But having fewer women in top positions means insurers are missing out on critical ...