Tag: insurance

Future-proofing Insurance: Embracing Sustainability in Insurance for a Resilient Future | Blog

Sustainability in insurance transcends traditional practices, weaving Environmental, Social, and Governance (ESG) elements into the core of day-to-day operations, thereby safeguarding the future of stakeholders and the planet. In this evolving industry, embracing sustainability is no longer optional but essential for mitigating climate risks, meeting regulatory demands, and ensuring long-term value in a world facing complex environmental and social challenges.

The shift toward sustainability in insurance

Sustainability is becoming increasingly critical in the insurance sector due to the escalating unpredictability of losses driven by climate change, economic instability, and social inequalities. As per a report by the National Oceanic and Atmospheric Administration (NOAA), in 2023 alone, the United States witnessed 25 climate-related disasters that each resulted in damages exceeding US$1 billion, nearly doubling the annual average from the previous five years and leading to 464 fatalities. Such extreme weather events, occurring in regions where they were previously uncommon, are compelling insurers to acknowledge their responsibility in environmental protection. Additionally, shifts in consumer behavior are influencing the move towards sustainable practices. A growing number of consumers, about 25%, are now willing to pay a premium for environmentally friendly products, such as electric vehicles and sustainably sourced clothing, expecting that the companies they patronize uphold similar ethical standards.

Regulatory changes are also pushing the insurance industry towards greater transparency and sustainability. In the first half of 2023, there were over 1,715 adjustments to the US state insurance regulations, many of which address climate issues. A notable example is the California Climate Risk Disclosure Survey, which requires insurers to disclose how they are managing climate-related risks. Moreover, entities such as the Securities and Exchange Commission (SEC) are preparing to enforce new mandates requiring climate risk disclosures, potentially impacting publicly traded insurance firms that do not proactively address climate change.

As a result, insurers have started developing and offering new products across personal, commercial, and specialty lines. In personal lines, companies have begun offering green property insurance, which covers eco-friendly materials and energy-efficient upgrades following a loss, as well as discounts for hybrid or electric vehicle owners to encourage sustainable transportation choices. In commercial lines, insurers in geographies like the US and EU now provide insurance for renewable energy projects and green building coverage, helping businesses transition to sustainable practices. These include coverage for renewable energy equipment, green construction materials, and tools to manage climate-related risks. Specialty lines see innovations driven by InsurTech, such as parametric insurance for climate risks and the use of IoT devices for real-time environmental monitoring, enhancing risk mitigation and encouraging eco-friendly behaviors.

Sustainable insurance in action

Insurers integrating sustainable practices into their value chains include:

  • AXA (2015), launching the AXA Climate School to educate clients on climate risks, enhancing client trust and risk management
  • Zurich Insurance Group (2017), initiating the Zurich Forest Project for reforestation, boosting their brand reputation and environmental impact
  • Allianz (2018), incorporating ESG factors into underwriting and investments, improving investment resilience and attracting ESG-conscious clients
  • Swiss Re (2019), ceasing re/insurance for the most carbon-intensive oil and gas companies, aligning with climate goals and reducing exposure to high-risk industries
  • Aviva (2020), setting a net-zero carbon target by 2040, enhancing long-term sustainability and appealing to eco-friendly investors
  • Munich Re (2021), investing in green bonds and applying ESG criteria to their investment portfolio, supporting sustainable projects and strengthening their market position in the green economy

Currently, while the integration of sustainability into corporate strategies is becoming crucial for many firms, the actual implementation of these strategies in a tangible way remains a very early stage for many companies. According to a global survey, 25% of insurers identified “grasping ESG-related regulations and guidelines” as their primary challenge in advancing their ESG initiatives. This was followed by 17% who cited “determining the most effective actions to take on ESG” as a key hurdle and 15% who pointed to “aligning ESG efforts with customer expectations” as a significant concern.

Challenges in implementing sustainable insurance

Besides the difficulties of managing risks in a world altered by climate change, the insurance sector also contends with issues arising from regulatory, operational, and market-related complexities.

  1. Regulatory uncertainty – Insurers need to navigate a complex web of local and international ESG-related regulations that can vary significantly from one jurisdiction to another. The lack of standardized regulatory frameworks makes it difficult for global insurance companies to implement uniform strategies across all markets. This regulatory complexity requires insurers to invest heavily in legal expertise and compliance functions to ensure they meet all applicable guidelines
  2. Lack of standardized metrics and data deficiency – The insurance industry relies heavily on accurate data to assess risks and set premiums. However, there is currently no universally accepted methodology for quantifying ESG risks, which complicates the integration of sustainability into traditional risk models. This lack of standardized data not only hinders the assessment and pricing of risks but also makes it difficult to track progress and measure the impact of sustainability initiatives
  3. Liability risks – One of the significant challenges for insurers in implementing sustainability is managing liability risks stemming from compensation claims related to climate change damages. As climate change increases the frequency and severity of extreme weather events, the potential for substantial claims also rises, impacting the liability side of insurers’ balance sheets. Additionally, there is an increased risk of litigation, with insurers potentially facing legal challenges for failing to manage or disclose climate-related risks adequately
  4. Affordability and availability of coverage – Affordability and availability of coverage pose significant challenges in implementing sustainability in the insurance industry. As climate change leads to more frequent and severe natural disasters, insurance costs rise, making coverage less affordable. High-risk areas, such as flood or hurricane-prone regions, for example, face higher premiums or loss of coverage, leaving communities vulnerable. This not only affects individual policyholders but also has broader economic implications, leading to underinsurance or no insurance in these zones
  5. Aligning sustainability with market and customer expectations – Insurers must balance the need to implement sustainable practices with the need to remain competitive and meet the expectations of their clients. This involves developing new insurance products and services that not only comply with ESG standards but also appeal to a market that is increasingly sensitive to sustainability issues

Shaping tomorrow’s insurance industry

In the insurance sector, several unpredictable developments stand out, including emerging risks such as an aging population, climate change, and cyber threats, along with the rise of the sharing economy affecting freelancer, auto, and home insurance markets and the integration of technology in the smart economy. Social factors, such as evolving consumer expectations for corporate responsibility and equitable services, also play a crucial role, as do governance issues like regulatory changes and corporate transparency. While accurately forecasting the future remains a challenge, identifying catalysts for market changes is possible. By combining historical data with industry insights, we can use a specifically designed model to construct various future scenarios. These scenarios illustrate potential outcomes and opportunities driven by key trends in environmental, social, and governance (ESG) aspects under different conditions [Exhibit 1]. With this approach, we can strategize effectively, choosing paths that optimize financial gains, enhance social impact, or minimize risks.

Slide1 1

Driving sustainability in insurance is not just about compliance with regulatory changes and risk management; it also involves capitalizing on new opportunities and fostering a more sustainable, resilient world. As financial intermediaries and risk managers, insurers have a unique ability to drive and support sustainable practices across different industries and communities. The following strategic key objectives present a structured approach for insurance companies to embed sustainability into each stage of their value chain, along with key performance metrics to align with broader societal goals [Exhibit 2].

Slide2

By embedding sustainability into its core identity and fostering innovation, the insurance industry can go beyond managing risks to actively stewarding the planet and its people. This transformation will not only reshape the industry but also significantly contribute to a sustainable, resilient, and equitable global future.

To discuss more on the importance of sustainability in the insurance space, please reach out to Debasruti Mitra at [email protected] and [email protected]  and stay updated by accessing Everest Group’s latest research on Insurance Business Processes.

Watch the webinar, What’s Next in Financial Services? Driving Transformation Through Sourcing, Technology, and Operations, to learn how the banking, financial services, and insurance (BFSI) industry is driving business transformation in response to evolving customer needs and the rapid adoption of AI and cloud technologies.

Guidewire Services PEAK Matrix® Assessment 2024

Guidewire Services PEAK Matrix® Assessment 

In 2023, the Property and Casualty (P&C) insurance industry progressed in digital transformation, prioritizing platform modernization to meet evolving business and customer demands. In this landscape, Guidewire was pivotal for insurers seeking to update their core systems. Thus, enterprises are optimizing operational efficiency, scalability, and customer engagement through flexible and interconnected system architectures.

In response, providers are improving their Guidewire expertise to align their services with modern P&C insurance requirements. The emphasis is on developing proficient talent pools, enhancing cloud integration strategies, and reinforcing data analytics capabilities to support complex migration and implementation processes. Additionally, they are expanding across growth markets, building local capabilities, adopting geo-specific strategies, and improving offshore capabilities for cost-effectiveness.

Guidewire Services

What is in this PEAK Matrix® Report

In this report, we analyze 28 Guidewire service providers featured on the Guidewire Services PEAK Matrix® Assessment 2024.


Contents: 

In this report, we share::

  • An assessment of 28 leading Guidewire service providers on Everest Group’s Services PEAK Matrix® evaluation framework
  • Characteristics of Leaders, Major Contenders, and Aspirants in the Guidewire services market
  • Detailed profiles of the providers, along with their key strengths and limitations
Scope:
  
  • Industry: insurance, financial services
  • Geography: global

GUIDEWIRE SERVICES PEAK MATRIX® ASSESSMENT 2024

Related PEAK Matrix® Assessments

Guidewire Services
PEAK Matrix®

Guidewire Services PEAK Matrix® Assessment 2024

Duck Creek Services
PEAK Matrix®

Duck Creek Services PEAK Matrix® Assessment 2024

Sustainability Enablement Technology Services
PEAK Matrix®

Sustainability Enablement Technology Services PEAK Matrix® Assessment 2024

Insurance Intermediaries Services
PEAK Matrix®

Insurance Intermediaries Services PEAK Matrix® Assessment 2024

Our Latest Thinking

Insurers and AI InsurTech Partnerships Blog
Blog

Insurers and AI InsurTech Partnerships

Artificial Intelligence digital concept
Blog

AI projects in Insurance are Moving from Pilots to Business Programs

Dgtl Ins Adptn dgtl skill gaps
Market Insights™

Insurance Firms’ Digital Skill Gaps

Dgtl Ins Adptn leaders outperform
Market Insights™

Digital Leaders in Insurance Outperform Others in All Digital Maturity Dimensions

What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

LEARN MORE ABOUT Top Service Providers

Duck Creek Services PEAK Matrix® Assessment 2024

Duck Creek Services

In the Property & Casualty (P&C) insurance sector, digital transformation is the key to enhancing operational efficiencies and underwriting profitability. Duck Creek Technologies leads this modernization with its SaaS platform, favored for its low-code configurability and robust performance. IT service providers are aligning their strategies and investments with Duck Creek’s vision to capitalize on this growing market opportunity. They are expanding their Duck Creek-certified talent pools and developing accelerators and frameworks to streamline implementations.

Duck Creek Services

What is in this PEAK Matrix® Report

This report examines the Duck Creek services landscape and examines 14 leading providers featured on Everest Group’s Duck Creek Services PEAK Matrix® Assessment 2024.


Contents: 

In this report, we share:

  • An assessment of 14 leading Duck Creek service providers on Everest Group’s Services PEAK Matrix® evaluation framework
  • Characteristics of Leaders, Major Contenders, and Aspirants in the Duck Creek services market
Detailed profiles of the providers, along with their key strengths and limitations
 

Scope:

  • Industry: insurance, financial services
  • Geography: global

Related PEAK Matrix® Assessments

Guidewire Services
PEAK Matrix®

Guidewire Services PEAK Matrix® Assessment 2024

Duck Creek Services
PEAK Matrix®

Duck Creek Services PEAK Matrix® Assessment 2024

Sustainability Enablement Technology Services
PEAK Matrix®

Sustainability Enablement Technology Services PEAK Matrix® Assessment 2024

Insurance Intermediaries Services
PEAK Matrix®

Insurance Intermediaries Services PEAK Matrix® Assessment 2024

Our Latest Thinking

07-23-2024 - Whats Next in Financial Services - 1200x628 - Join Us
Events

What’s Next in Financial Services? Driving Transformation Through Sourcing, Technology, and Operations

GettyImages 1828732247
Blog

Future-proofing Insurance: Embracing Sustainability in Insurance for a Resilient Future

India IT services
Blog

Everest Group Talent Demand Growth Index

GettyImages 530281555
Blog

Services Industry Growth is Bottoming Out, but How Much Does It Matter?

What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

LEARN MORE ABOUT Top Service Providers

Revolutionizing Risk: Exploring Actuarial Outsourcing in Insurance | Blog

Outsourcing is a growing trend in the insurance industry to transform the actuarial function by reducing costs, creating innovation, increasing efficiencies, and filling the talent demand. Explore the factors driving insurers to partner with specialized service providers and the advantages and obstacles of actuarial outsourcing. Contact us to learn more.

In response to today’s uncertain macroeconomic conditions, changing customer demands, and geopolitical and climate risks, insurance and financial institutions realize the critical need for actuarial transformation.

This transformation involves reimagining the role of actuaries in the organization and adopting new technologies and methodologies. Enterprises increasingly seek outsourcing support from specialized service providers to enhance the effectiveness and efficiency of actuarial processes, including pricing, reserves determination, capital assessments, and financial reporting.

Outsourcing can also help enterprises meet a surging demand for specialized actuarial talent. According to the Bureau of Labor Statistics, the demand for actuaries is expected to increase by 21% between 2021 and 2031. This growth rate surpasses most occupations, signaling a promising future for those working in the industry.

The rising demand for attractive job opportunities in related fields like data science compounds this increasing demand. Additionally, insurers compete with technology firms for the best actuarial professionals, even inside the profession.

Recognizing that the increasing demand for actuaries is unlikely to subside naturally, insurers are proactively addressing this issue. Outsourcing actuarial services is emerging as a compelling long-term solution that enables insurers to maintain control and gain a strategic market advantage.

While insurance providers and insurtechs have outsourced actuarial services since the early 2000s, the trend has accelerated in recent years due to the rising complexity of actuarial work, the need to focus on core competencies, and the rise of insurtechs. Let’s take a look at the factors fueling its momentum.

Key trends shaping actuarial services outsourcing

Heightened demand for expertise and the integration of cutting-edge technologies are among the key factors shaping the future of actuarial outsourcing. These trends reflect the industry’s commitment to staying ahead in a competitive market.  Understanding these driving factors is crucial for insurers to harness the full potential of actuarial services outsourcing.

Screenshot 2024 05 21 102349

Advantages of outsourcing in actuarial transformation

The advantages of outsourcing in actuarial transformation extend beyond fiscal efficiency to encompass resource flexibility, access to specialized knowledge, and freeing resources to focus on more strategic tasks.

Image 2

  • Cost optimization: Actuarial outsourcing optimizes costs by using offshore resources and the specialized expertise of external partners. This fiscal advantage is significant in the insurance industry, where financial prudence is paramount. Insurance companies can significantly cut operational costs by automating manual processes and eliminating the need for an extensive in-house team
  • Resource scalability: Actuarial workload fluctuates frequently, making maintaining an appropriately sized in-house team difficult. Outsourcing enables insurers to adapt their actuarial workforce to changing demands. This flexibility encourages prudent control of operating costs while ensuring workforce numbers align with actual needs
  • Specialized expertise: Outsourcing partners bring a rich reservoir of specialized knowledge and expertise. Their in-depth understanding of actuarial nuances and steadfast commitment to staying current with best practices elevate actuarial work standards and expedite the implementation of novel solutions. This augmented expertise ensures alignment with the ever-evolving regulatory framework and enhances the organization’s overall actuarial capabilities
  • Strategic focus: Outsourcing relieves internal teams of routine actuarial tasks, freeing them to concentrate on key strategic objectives. Insurance companies can focus on developing cutting-edge products, creating customer-centric solutions, and other mission-critical initiatives supporting growth, leading to a competitive edge
  • Regulatory agility: Actuarial outsourcing is a flexible tool for regulatory conformity when supported by providers with a clear focus on compliance. It ensures that actuarial procedures consistently meet the ever-changing regulatory environment. This regulatory agility helps insurers avoid compliance-related pitfalls while enhancing their reputation for diligence and reliability
  • Resource optimization: Actuarial outsourcing allows insurers to manage their resources more effectively. It will enable insurers to skillfully adjust their resource configuration while supporting legacy applications during the transformation without incurring internal hiring and training costs. This flexibility ensures actuarial tasks are handled quickly and continuously, guaranteeing smooth operations even in the face of unforeseen resource constraints

Challenges with outsourcing actuarial services

Next, we explore the obstacles insurers may face, as illustrated below:

Image 3

Financial challenges

  • Accuracy and timeliness: Outsourcing partners may struggle to deliver accurate results on time because of the complex nature of actuarial processes, potentially leading to financial errors or reporting delays
  • Expertise gap: Outsourcing providers might lack the in-depth actuarial expertise required for precise financial calculations, raising concerns about the quality of results

Operational challenges

  • Communication challenges: Poor communication between the insurer and the outsourcing partner can result in subpar project management, inefficient processes, and delays in critical tasks
  • Quality and risk management: Inadequate quality and risk management processes by the outsourcing provider can compromise the overall quality of work, leading to operational inefficiencies

Counterparty challenges

  • Resource scalability: The outsourcing partner’s ability to scale resources to match fluctuating actuarial workloads is crucial. If they lack the talent, capacity, or expertise, it can hinder the insurer’s objectives
  • Contractual obligations: If the provider does not fulfill contractual terms, actuarial processes may be disrupted, causing unanticipated issues

Reputational challenges

  • Stakeholder interactions: Inexperienced outsourcing partners may jeopardize relationships with external stakeholders such as regulators, insurers, and policyholders, leading to reputational risks
  • Specialized roles: Outsourcing specialized actuarial roles due to a shortage of local talent may negatively impact the insurer’s reputation in those areas if the provider is inexperienced

Armed with an understanding of the opportunities and challenges of outsourcing actuarial services, selecting the right partner is critical. Insurers must evaluate providers’ capabilities by carefully considering their expertise, experience, cost-effectiveness, security measures, and technology infrastructure to make an informed decision.

To discuss actuarial outsourcing trends, contact [email protected] and/or [email protected]. Stay updated by accessing Everest Group’s latest research on Insurance Business Processes.

Watch the webinar, Transforming to Thrive: Building Winning Operating Models Amid Disruption Across Industries, to learn about trends impacting enterprises across industries, such as healthcare, life sciences, insurance, and banking and financial services?

Insurance Intermediaries Services PEAK Matrix® Assessment 2024

Insurance Intermediaries Services

Amid evolving market dynamics, the insurance intermediary sector is transforming significantly. There is a noticeable shift toward prioritizing digitization and adopting advanced technologies to drive change, especially amid the challenging economic landscape and ongoing market consolidation. Additionally, with the emergence of risks associated with climate change and cyber threats, intermediaries are expanding their role beyond traditional risk placement to become strategic advisors. They leverage data-driven insights to offer proactive risk management solutions to clients.

As the insurance intermediary segment adapts to this evolving landscape, there is a growing trend of forging partnerships with providers to optimize costs, access technical capabilities, and tap into talent expertise. Concurrently, providers are actively investing in digital capabilities, partnering with InsurTech companies, and enhancing collaboration with intermediaries through a consultative approach.

Insurance Intermediaries Services

What is in this PEAK Matrix® Report

In this report, we assess 15 insurance intermediary Business Process Services (BPS) providers and position them on Everest Group’s PEAK Matrix® framework as Leaders, Major Contenders, and Aspirants. Each profile offers a comprehensive picture of the provider’s vision, delivery capabilities, market success, and key strengths and limitations. The report also examines the global insurance intermediary services market and its provider landscape. The study will assist key stakeholders, such as insurance intermediaries, service providers, and technology providers, to understand the current state of the insurance intermediary BPS market.


Contents: 

This report features 15 insurance intermediary service provider profiles and includes:

  • Providers’ relative positioning on Everest Group’s PEAK Matrix® for insurance intermediary services
  • Providers’ market impact
  • An evaluation of providers’ vision and capabilities across key dimensions

Scope:

  • Industry: insurance intermediary services
  • Geography: global
  • In this report, we only cover vertical-specific insurance intermediary operations and have omitted horizontal business processes, such as Finance and Accounting (F&A), HR, procurement, and contact centers

Related PEAK Matrix® Assessments

Guidewire Services
PEAK Matrix®

Guidewire Services PEAK Matrix® Assessment 2024

Duck Creek Services
PEAK Matrix®

Duck Creek Services PEAK Matrix® Assessment 2024

Insurance Intermediaries Services
PEAK Matrix®

Insurance Intermediaries Services PEAK Matrix® Assessment 2024

Low-code Technology
PEAK Matrix®

Low-code Technology Providers in Insurance – Products PEAK Matrix® Assessment 2023

Our Latest Thinking

07-23-2024 - Whats Next in Financial Services - 1200x628 - Join Us
Events

What’s Next in Financial Services? Driving Transformation Through Sourcing, Technology, and Operations

GettyImages 1828732247
Blog

Future-proofing Insurance: Embracing Sustainability in Insurance for a Resilient Future

GettyImages 2058356091
Blog

Revolutionizing Risk: Exploring Actuarial Outsourcing in Insurance

Business Benefits of Adopting a Low Code PaaS Solution
Market Insights™

Transforming Insurance: Creating a Best-of-Breed Model by Combining Low-code and Core Platforms

What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

LEARN MORE ABOUT Top Service Providers

What Insurers Need in Order to Win in 2024 | In the News

The world is facing increased risk and uncertainty today, which means that the need for protection has increased for individuals as well as for corporations. This also means insurers can charge higher premiums for their products. Read on to find out three ways insurers can differentiate on customer experience and win in 2024 in this article co-written by Manu Aggarwal, Partner in Everest Group’s Business Process Services practice.

Read more in Insurance NewsNet.

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

"*" indicates required fields

Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.