 Photo Credit: Fotolia - Royalty free image |
The diktat of the digital technology with the transformation of distribution networks, the regulatory changes and the overhaul of risk models compels the sector to rethink its structures amidst an economic framework characterized by a crisis that is lasting.
In fact, insurers are not facing a simple transition but an anonymous revolution. A model comes to an end to be replaced by a new one where the past, the present and the future collide under the watchful sight of an ever more demanding supervisory authority.
The insurance business is now required to build new structures that would allow it to face all challenges. In this regard, the quality of human resources made available is of paramount importance. Hiring, training and payroll shall be the key to success and survival for the various players.
The insurance industry: challenges faced by the market
Life insurance challenges
In mature economies, life insurance is an important channel for savings. This activity model, source of substantial profits is now under threat. The poor interest rates and financial market volatility scare life insurers who meet hardships in honoring the promised returns to the insured.
Jobs in this class of business, mainly those of traders, are preserved for the time being but the situation may evolve if the challenges linger on.
Health insurance is worse off than the life business. The economic slowdown has triggered a deterioration of the purchasing power of citizens, affecting also some kind of customers. Premium volumes are not progressing and for numerous insurers they have even dwindled down. This situation accounts for lower salaries in the health insurance jobs. A substantial staff turnover therefore ensues for a sector that can no longer hire any more personnel.
Policyholders’ conduct
The race for better tariffs
The economic crisis has strained the population whose budget has been shrinking. Insurance expenses end up being affected. Recourse to Internet and to price comparators enables many policyholders, especially young ones, to favor less costly coverage schemes.
Volatile customers
Policyholders do not hesitate to refer to competition; should the price criterion be paramount, guarantees and exclusions are further scrutinized and compared. The plethora of the products proposed with innumerable options incites customers to change their insurers as loyalty is no longer on the agenda.
In some countries, such mobility has been encouraged by the authorities. In an effort to involve competition in a more active fashion, the regulators have made cancellation procedures easier for some insurance policies, thus, promoting customer turn-over.
Regulatory requirements
Product marketing, in-house management and insurers’ solvency have now come under the scrutiny of regulators and other oversight agencies. In the European Union, Solvency II (1) is taking care of everything. In the MENA zone, legal provisions are aimed at regulating takaful business while new mandatory insurance schemes (third party liability and health) are taking shape.
Some countries like Morocco are trying to come close to Solvency II prudential rules. In the CIMA zone, Western and Central Africa, the insurance code keeps evolving constantly on a yearly basis, getting closer and closer to international standards.
This progress is accounted for by specialized teams. Compliance with regulatory requirements needs development of skills and even the acquisition of new ones. Insurers are henceforth in need of new talents to ensure compliance of their activities.