- 3 min
5 challenges for the insurance sector in 2022!
France Assureurs (FA, formerly FFA) has published its annual risk map for the insurance and reinsurance sector. It lists the main risk factors identified by the industry, and divides them into several categories: economy, environment, society, technology, policy and regulatory issues.
ccording to this, insurance operators will have five major challenges over the medium term. While most of them were already on last year’s list, some have become even more pressing.
1. Becoming experts in data management and security (no change)
Like last year, the report highlights the issue of personal data. This is the main technological risk associated with changes in insurance businesses.
According to FA, insurers must absolutely develop impeccable expertise in controlling and protecting the data of their policyholders. Mismanagement exposes them to three risks: reputational, operational (pricing error) and judicial risks.
This is a major challenge, given how communication channels are evolving between insurers and policyholders (special apps, chat or messaging services with advisors, online claim submission, etc.).
2. Preparing for (and limiting) climate change (up 3 places)
As explained in the latest IPCC report, it will no longer be enough to simply reduce the impact of human activities on the environment. We must also prepare to live with the consequences of climate change, particularly the adverse effects on habitats.
Environmental risk stands out in the France Assureurs risk map as a more pressing issue, climbing from fifth to second place in a year. The main consequences, according to insurers, relate to human health, infrastructure and imbalance in economic systems.
3. Shifting towards new pension and healthcare models to address an ageing population (no change)
This is a long-term trend: technical advances in the field of health (intensive care, cancer treatments) are having an impact on human mortality rates and life expectancy. People are living longer and are also in better health.
This demographic shift raises several questions. First of all, how can we adjust the balance between public and private care, amid rising healthcare costs and the emergence of new personal care services? Secondly, how can we allocate wealth (pensions and dependency grants) in a balanced and sustainable manner?
4. Enhancing cyber security in a world of “remote working” (down 2 places)
All insurers expect cyber crime to be the main risk in five years’ time, ahead of environmental risk.
The surge in cyber attacks during the pandemic lockdowns posed a challenge for businesses when it came to securing their activities in remote working environments. They will need to move quickly to explore reliable technological solutions and processes but, above all, they will need to raise awareness among their staff.
5. Integrating new technologies… and new sector players! (up 1 place)
This is a challenge that particularly concerns traditional insurers. The report pinpoints blockchain and AI as the two most disruptive technologies for the sector.
If they want to keep their market share from being snapped up by new operators, insurers will have to integrate these initiatives and make changes to their models: incubation of new projects, in-service training for employees, strategic alliance with tech leaders or the GAFAM, etc.
Like last year, the report points to two overriding concerns: technological risk and environmental risk, which are now the predominant risks in the France Assureurs classification. In contrast, the pandemic and its implications are nowhere in sight. Ultimately, what if the biggest challenge for the insurance industry was unpredictability? We can already assume that, given the current environment, the perception of political risk will change, after remaining stable between 2020 and 2021. However, the stability of political risks, which rank anywhere between 14th and 17th place depending on geography, clearly illustrates how this issue is being pushed to back of people’s minds, and how difficult it is to anticipate it. And not just for insurers.