How does the insurance industry prepare for recovery while still operating in the challenging context of COVID-19? It is possible? This is not the first time that insurers have to recover from a tight economy.
The insurance industry is strongly affected by the economic recession that is expected to follow the COVID-19 pandemic. This will have a ripple effect, as the sector, as shown in the latest annual report for Insurance Europe 2019-2020, contributes greatly to Europe's economic growth and development. One third of all internationally active insurance groups are headquartered in the EU and Europe is also considered a world leader in reinsurance.
As we face the ongoing effects of COVID-1
The COVID-19 effect
Insurers, despite being historically resilient, have felt the effects of COVID-19. Measures taken to curb the pandemic have resulted in business interruptions, cancellations of events and travel and mortality – all of which have affected claims. Insurers are also facing a decrease in business values and a decrease in business volumes when the recession hits. And in the near future, the pressure is expected to continue. The European Insurance and Occupational Pensions Agency's risk panel (OECD) estimates a reduction in global GDP to 4.5 per cent by 2020 (7.9 per cent in Europe), where large European economies are expected to suffer even worse (Italy: -10.5 per cent, UK: – 10.1 percent, France: -9.5 percent).
As described in Accenture's recent Insurance: Strategic Plays for Recession Recovery Report, the COVID-19 crisis has hit the market value of insurance companies faster than previous financial crises. Specific lines, such as trade credit, inland navigation insurance and workers' compensation, are particularly vulnerable, as are specific segments, such as small and medium-sized enterprises. However, our research also indicates that there are great opportunities for insurers to apply strategies that help them maneuver the uncertainty.
A way forward
Despite the risks facing the insurance industry, there is some hope. A number of leading insurance companies have not only maintained their business continuity during the pandemic, but also renewed themselves to start new exciting initiatives. , specific business sectors and key medical staff affected by the crisis. They have also actively contributed to a global investment program to support global economic recovery.
I Insurance: Strategic Games for Recovery Report Accenture analyzed the recessionary impact on the insurance industry and the strategies used by insurers to outperform competitors in previous recessions. Based on these patterns, we reveal insights that can help insurers test the resilience of their strategies, become stronger and outperform competitors.
Innovative, sustainable strategies for recovering from the economic downturn are possible. In fact, these strategies can only be an opportunity to revive and rethink traditional insurance models. corporate recession response.
Read the full insurance: Strategic games for recession recovery report.
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