Looking ahead to 2024, the insurance industry is facing various challenges, but there is optimism in how it will navigate through them. With a strong sense of purpose, insurance continues to provide protection and security for individuals, families, and businesses.
In terms of the macro-economic outlook, global forecasts for 2024 point to a slowdown in GDP growth and ongoing inflationary pressures. The U.S. is experiencing talent shortages, with unemployment below 4% overall and around 2% in the insurance sector. Consumer sentiment in major markets is affected by various factors, including recessionary concerns in the U.S. and uncertainties from recent tax changes in the U.K.
For P&C insurance carriers, revenue growth is expected to slow to 2.6% on average for 2024 and 2025, down from 3.4% in 2023. On the other hand, the Life insurance segment is seeing increased demand for savings and retirement products, particularly in emerging markets where revenue growth is projected to reach 5.1% on average in the next two years.
Claims volumes and costs across different lines of business remain elevated, driven by factors such as inflation, social inflation, increasing NatCat claims, and demographic shifts. Despite these challenges, the industry remains optimistic about the future.
In 2024, there are five key predictions for the insurance industry. Firstly, there will be a focus on monetizing AI, with insurers looking to leverage AI solutions for economic impact. Secondly, alternative human capital strategies will be explored to address workforce gaps and enhance decision-making processes.
Cost pressures are expected to drive changes in operating models, with a shift towards greater autonomy and cost control. Additionally, there will be a reallocation of risk portfolios and capital as insurance players explore opportunities in different sectors such as P&C, health, and wealth management.
Lastly, service revenues are expected to rise as insurance carriers offer more advice and risk mitigation services to improve return on equity and manage new loss patterns. Overall, the insurance industry is poised for innovation and adaptation in response to the evolving economic landscape.
