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

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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 ...

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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 ...

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 ...

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 ...

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 ...

Five themes from InsureTech Connect 2019

Following the annual three-day gathering of approximately 7,000 insurance industry leaders last week at InsureTech Connect in Las Vegas, we reflect on what we heard. Five themes were clearly top of mind for most attendees. 1. Leveraging digital and analytics to reduce costs and streamline current operations. Freeing up capital to invest in growth, customer and agent experience, and other priorities gives carriers the flexibility to strengthen their long-term relevance. As a result, many carriers ...

A note to the CEO: It’s time to cut through the noise on productivity

Many insurers have failed to benefit fully from the decade-long global economic expansion. In recent McKinsey research, insurers in the second, third, and fourth quintiles of economic performance may be on slippery ground, generating only about $26 million in economic profit from 2013 to 2017. Meanwhile, a typical carrier in the bottom quintile destroyed nearly a billion dollars in value every year. But some insurers are highly profitable—a carrier in the top quintile created an ...

InsureTech Connect 2019 overview: Today’s pivotal insurance topics

InsureTech Connect, the annual gathering of thousands of leaders from insurance carriers, insurtechs, and venture capital firms, provides a great opportunity to explore the industry’s most pivotal topics, such as how new technologies and capabilities are transforming all aspects of the industry. I have attended InsureTech Connect since the inaugural conference in 2016. In the first few years of ITC, attendees tried to determine if the industry was making significant progress on the ...