Currently, in the year 2024, the insurance industry is facing numerous challenges, but there is a sense of optimism too. The insurance sector is inherently resilient and has a fundamental purpose to provide families, individuals, and businesses security and a more protected future. From AI/GenAI enthusiasm and doubt, cost pressures, and decline of risk capital, to workforce gap, the health insurance industry has both opportunities and challenges ahead.
In this article you can read more about the current health insurance scenario and what can be expected from the upcoming days.
For property and casualty (P&C) insurance carriers, top-line revenues tend to move in tandem with GDP. Growth of revenue for P&C carriers is projected to slow to an average of 2.6% in 2024 and 2025, which is lower than 3.4% in 2023.
Conversely, the health insurance segment is witnessing greater demand for savings and retirement products. Revenue growth can reach an average of 5.1% in 2024 and 2025 in emerging markets, which could help mitigate some of the current liquidity and profitability challenges faced by this segment.
Claims costs and volumes remain high across various sectors of business in the bulk of major markets. This is partly driven by inflation and cyclical factors, but systemic risks such as demographic shifts in health, ageing, and mental health, increasing natural catastrophe (NatCat) claims, and social inflation, are persistent issues.
While the health insurance industry remains optimistic, the challenges ahead are substantial. Here are five key projections for 2024:
There has been extensive speculation and discussion about Generative AI since the introduction of ChatGPT. In 2024, the focus will shift from hype to realising tangible economic impacts from AI or GenAI solutions.
Insurance companies that have invested in AI capabilities, data, and analytics, will integrate more GenAI. They will emphasise responsible and ethical usage while AI takes on more autonomous roles.
Continuous cost pressures are prompting business units and division heads to seek direct control and greater autonomy over costs. In 2024, doubts and internal frustrations about the allotment procedures of centralised costs will drive demands for operational changes. This could lead to significant shifts in how costs are managed and controlled within organisations.
AI or GenAI is now integral to interactions, processes, and decision support across the insurance value chain. Luckily, this arrives at a critical time as the industry is fighting to bridge the workforce gap in claims and underwriting.
In 2024, AI/GenAI will be viewed as complementary talent, and insurers will explore new sourcing models for intricate tasks traditionally handled in-house. This shift will require moving away from conventional talent development methods like standard knowledge management practices and apprenticeships.
In order to improve return on equity (RoE) and manage capital demands amidst evolving loss patterns, insurers will expand beyond traditional products into advisory and service offerings. Risk mitigation services, care navigation, and Telehealth will become focal points for building carriers this year and beyond. These services will not only provide additional revenue streams but also help mitigate risk and enhance customer satisfaction. For more information on how health insurance is adapting to these changes, you can read more about the latest trends and offerings.
Industry convergence is accelerating, with players expanding into new areas such as wealth management, P&C, and health. P&C carriers are looking into health products, automakers are exploring P&C insurance, and health insurers are providing voluntary benefits.
The retirement space presents significant opportunities as Millennials and Gen Z inherit wealth and seek values-driven investment options. This convergence will give birth to new opportunities and challenges for insurers.
As we move into 2024, the insurance industry has to navigate a complex landscape of economic pressures, talent shortages, and evolving consumer expectations. By leveraging advancements in AI, exploring new human capital strategies, adapting operational models, and expanding service offerings, insurers can continue to provide essential protection and security for their clients. Despite the challenges, the industry's resilience and commitment to innovation will drive its success in the year ahead.
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