Global: Politics, innovation to influence insurance sector's fate
Source: Middle East Insurance Review | Jan 2025
By 2040, technological innovation driven by customer centricity could pave the way to greater climate resilience and more personalised offerings by the insurance industry. Alternatively, insurance could become a luxury afforded only to the wealthiest few. These are potential paths for the insurance industry, according to a new future of insurance study by Economist Impact and SAS.
Informed by in-depth desk research and expert interviews, four prospective futures for the sector emerge in a report titled Revealing the paths to 2040: Four possible scenarios for insurance. The report is the first in a two-part study examining the factors that will shape the future state of the industry and the role technology could play in helping insurers navigate change.
“Our scenarios are not intended to predict the future,” said Economist Impact senior analyst Edwin Saliba. “Instead, they explore possible futures for the insurance industry, helping insurers better position themselves to respond effectively to emerging challenges and seize new opportunities,” Mr Saliba said.
Per the report, the level of global cooperation and the pace of technological change will help determine how effectively and equitably the insurance sector, governments and societies at large address policy challenges like the climate crisis. Each path forward includes expert recommendations for industry leaders to build resilience and foster agility.
“There is a non-zero chance the insurance industry will collapse by 2040 – and that should prompt all insurers to take stock of growing risks and their overall resilience,” said SAS principal global insurance advisor Franklin Manchester. “Insurers can’t price customers out of coverage in flood zones to remain profitable in the climate crisis, certainly not in perpetuity, and perhaps not for much longer,” Mr Manchester said.
He said that as the digital revolution played out in parallel, insurers should invest in responsible innovation for a more climate-resilient and prosperous future, or risk failing the fundamental value proposition of insurance. M