EY 2015 Global insurance outlook

Global insurance outlook
► Major themes for global insurance in 2015
► Asia-Pacific
► Canada life-annuity
► Canada property-casualty
► Europe
► Latin America
► US life-annuity
► US property-casualty
2015 Global insurance outlook
For additional information go to
ey.com/insurance/2015outlook

Major themes for global insurance in 2015
► PHOTO

Common themes for the Asia-Pacific, Canada, Europe, Latin
America and US life-annuity and property-casualty markets:
► Pinpointing growth: Opportunities exist to improve
competitive standing by providing products to underserved
consumer markets, the expanding middle class and the
high-net-worth population.
► Technology: As the world returns to more stable
economic conditions, the global insurance industry is
investing in technology and digital platforms to build and
strengthen customer relationships across all product
classifications and geographies.

► Customer focus: A common goal is to empower businesses
and consumers to better shop for insurance, making
products more transparent and easier to understand and
compare.
► Transformation: To attain the speed and agility demanded
by competitive pressures and customer preferences,
insurers look to simplify systems, processes and structures
and enhance operational efficiency, cost management and
enterprise data excellence strategies.
► Regulation and compliance: In today’s demanding
regulatory environment, insurers will increasingly need global
enterprise risk management capabilities and improved risk
analyses.

Asia-Pacific
Technology is accelerating mobile and web-based opportunities

Asia-Pacific
► Growth prospects remain favorable for life and non-life
insurance products, with GDP projected to be 5.5%.
► The expanding middle class and high-net-worth population
present opportunities for insurers to increase sales of
personal and commercial lines and health insurance.
► Prospects for commercial lines remain strong, given the
region’s elevated catastrophe risk, the rise in infrastructure
and home building across much of Asia-Pacific, and a low
insurance penetration rate.
► Rising real estate and financial asset values are enabling
insurers to produce higher premium volume from the
increased protection levels.

Asia-Pacific
► Insurers are challenged to invest in data analytics and
modeling capabilities, as well as internet and mobile
digital sales, distribution and customer service solutions,
given an increasingly technologically sophisticated
population.
► Regulations addressing insurer solvency, capital and risk
management are moving to the front burner, as are
consumer protections in the areas of data privacy and
security.

Canada life-annuity
Entering a new era

Canada life-annuity
► After several years of constrained growth of life-annuities,
opportunities exist to improve competitive standing by
providing products to underserved consumer markets.
► To boost sales revenue, life insurance and annuity
providers in Canada must streamline the transaction
process and make their products easier to understand and
compare, while streamlining the transaction process.
► A key challenge for insurers in 2015 is the need to
develop more robust mobile digital technologies, data
analytics and social media strategies to address growing
consumer expectations of more refined product sales and
distribution.

Canada life-annuity
► To enhance the customer experience, life insurers must
consider the value of a digital platform to share
information with and among brokers and consumers.
► A key opportunity is to develop solutions absorbing the
longevity risks of pension plan de-risking actions, which
are driven by improvements in life expectancy and the low
interest rate environment.
► Regulatory pressures continue to intensify, putting the
onus on life insurers to improve compliance and control
functions and implement more robust governance
programs that address key business risks.

Canada property-casualty
Improving the level of consumer trust
► PHOTO

► Profit margins are challenged by continuing low interest
rates and GDP growth, a volatile investment climate and
expense increases from needed infrastructure
improvements.
► A major competitive opportunity for insurers is to
strengthen their relationships with customers while
digitally empowering them to better shop for and compare
insurance products.
► A key challenge in 2015 is to improve the industry’s low
level of consumer trust by integrating distribution and
communication channels and providing more transparent
information.

► Building an enterprise data excellence infrastructure via
more robust data analytics and predictive modeling will
help insurers pinpoint new growth opportunities, optimize
claims outcomes, reduce the incidence of claims fraud
and mitigate bottom-line risks.
► Improve customer connectivity by expanding distribution
and customer service, transforming operations, and
investing in technologies such as cloud computing, mobile
solutions and business collaboration software.
► Regulatory pressures include demands for insurers to
become more disciplined in their risk management, capital
planning and operational oversight.

Europe
Product innovation ahead
► PHOTO

Europe
► European insurers will continue to be challenged on both
sides of the balance sheet in 2015, as economic recovery
throughout the region is overshadowed by low business
investment rates, slower global growth and heightened
competition in many classes of business.
► Insurance companies have greater responsibility to
interact with the customer, provide a range of digital
communication channels, encourage loyalty and brand
awareness, and tailor products to individual needs.
► Insurers are scaling up their analytical capabilities to be in
a better position to use data in a more connected way.

Europe
► Meaningful insights can be drawn at virtually every stage
of the insurance life cycle, from customer targeting to
product design and pricing, underwriting, claims and
reporting.
► Regulatory initiatives will require greater transparency
regarding the information provided to customers, revisions
to relationships with distributors and greater governance
and oversight over new and existing products.
► Finance is under pressure to show it can be a better
business partner in planning, budgeting and forecasting,
adding more value while also responding to regulatory
requirements and tax challenges.

Latin America
Expanding complexity in maturing and developing markets
► PHOTO

Latin America
► Growth prospects are generally favorable, although
market demand for insurance products is evolving at
different rates, given disparate economic factors across
the region.
► Maturing markets increase demand for efficiency and
quality services, a demand that is met by pursuing
economies of scale and deploying robust technology
infrastructures.
► As competition throughout Latin America intensifies,
insurers are leveraging data analytics and predictive
modeling techniques to improve their underwriting and
management of risks.

Latin America
► A key challenge for many insurers in 2015 is the need to
modernize their operations and distribution models to
adapt to rising business and consumer expectations of
digital, mobile and internet interactions, particularly for
commercial lines of insurance where intermediaries retain
control.
► Global regulatory standards for capital solvency and risk
management are on different timetables, putting the onus
on insurers to continually monitor and evaluate these
developments to exploit a competitive advantage.

US life-annuity
Sales benefit from consumer confidence and personal wealth

US life-annuity
► Growth prospects are promising as the overall economy
improves, consumer wealth increases and interest rates
creep higher.
► Key challenges include growing competition, especially
from new capital entrants seeking to disrupt traditional
market positions with new models and market approaches
aligning with rising customer expectations.
► Insurers must expand their digital capabilities with new
internet, social media and mobile tools that empower
customers and distributors with self-service features, while
also making insurance products easier to understand,
compare and buy.

US life-annuity
► A major opportunity to widen margins exists for insurers
that leverage big data and the cloud to transform back-
office systems and processes.
► Insurers can expect to build upon recent improvements in
annuity sales, as credit rates continue to increase and
customers return to simplified, tax-deferred products.
► There are opportunities to develop online advice and
transactional models to compete with online banking and
investment services.
► Providers continue to be challenged as they navigate the
complex capital solvency and risk management
regulations enacted in the aftermath of the financial crisis.

US property-casualty
On its way to a second year in a row of strong performance
► PHOTO

► Despite slow-to-rebound interest rates, US property-
casualty insurers expect strong performance, with
combined ratios returning to pre-financial crisis years.
► A key challenge includes low premium growth, which
continues to be inhibited by rising competition, an
overabundance of capital, and inexpensive reinsurance,
the latter a consequence of low insured catastrophe
losses the last two years.
► Soft pricing is constraining profit margins, compelling
insurers to focus on expense management and
operational efficiency, reducing costs through technology
upgrades, process optimization and selective offshoring.

► Market-leading performance is being driven by
investments in technology, distribution and risk
management systems.
► On the distribution front, insurers will optimize the channel
mix, adding distribution outlets and expanding aggregator
and direct-to-consumer models, while providing
consumers with enhanced product price transparency and
real-time support and service.
► To address evolving regulation and increased compliance,
insurers will need to invest in more skilled management
and data analytics resources in 2015.

Contacts
Shaun Crawford
Global Insurance Leader
scrawford2@uk.ey.com
+44 207 951 2172
David Hollander
Global Insurance Advisory Leader
& Americas Insurance Co-Lead
david.hollander@ey.com
+1 215 448 5756
John Santosuosso
Global Insurance Assurance Leader
& Americas Insurance Co-Lead
john.santosuosso@ey.com
+1 617 585 1867
Jonathan Zhao
Asia-Pacific Insurance Leader
jonathan.zhao@hk.ey.com
+852 2846 9023
Andreas Freiling
EMEIA Insurance Leader
andreas.freiling@de.ey.com
+49 6196 996 12587
Hugh von Bergen
Global Insurance Tax Leader
hugh.von.bergen@sg.ey.com
+65 6309 8819
Mike Davies
Global Insurance Actuarial Leader
mdavies2@uk.ey.com
+44 20 7951 0531
David Lambert
Global Insurance TAS Leader
dlambert@uk.ey.com
+44 20 7951 9848
Marc-Andre Giguere
Canadian Financial Services
Insurance Leader
marcandre.giguere@ca.ey.com
+1 416 943 3994
Duarte Carvalho
Latin America Insurance (Brazil)
duarte.carvalho@br.ey.com
+55 11 2573 3243
Gustavo Bohorquez
Latin America Insurance (Mexico)
gustavo.bohorque@mx.ey.com
+52 55 5283 1300

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EY 2015 Global insurance outlook

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EY 2015 Global insurance outlook