Global insurance premiums could reach $10 trillion by 2030, according to Bain & Company’s new report.
The management consulting firm has released its new report entitled ‘Insurance 2030: As Risks Mount, Insurers Aim to Augment Protection with Prevention’. The new research explores the evolving risk landscape for insurers, showing risks declining or flat-lining in mature areas, such as personal auto and mortality; expanding in new areas, such as cybercrime and digital assets; and growing more severe in others, including climate change and infectious disease.
It was revealed that these changes are propelling the insurance industry to take on a new role.
“The consequences for an underprotected world with low insurance penetration may be severe, particularly in emerging markets,” said Andrew Schwedel, who leads Bain & Company’s Macro Trends group. “Thanks to improved technology and data, insurance companies now have the chance—and perhaps even the duty—to shift the industry’s central purpose from loss reimbursement to loss control over the next decade.”
A shift in insurance
Over the next three decades, Bain & Company expects climate change will result in a roughly ten times increase in economic losses. According to the company, during 2020, the US experienced a record number of wildfires and a record number of storms during hurricane season, yet insurance still does not cover most losses from such natural catastrophes.
Risk and protection are also shifting geographically toward countries with faster economic growth. Bain’s new research shows China will drive well over a quarter of global premium growth through 2030. However, few multinational insurers can participate in China’s insurance markets, due to competition and regulations.
Turning to technology
Insurers can now use technology tools, such as automation or the internet of things, to directly partner with customers to identify, prevent and mitigate each risk event. Bain’s research shows that these technologies can also reduce operational costs by as much as 50% through increased efficiency and reduce claims payouts by up to 20% by mitigating risks.
The shifts in what we need to protect, and how we protect against them, have disrupted traditional insurance value chains. The ascent of embedded insurance and capabilities as a service will reshape the industry, with estimates for gross written premiums reaching $700 billion by 2030, according to Bain & Company. This impact will vary by industry, with the greatest penetration likely starting in three major sectors: auto, travel and property—where insurance can easily be embedded into the sales or booking processes.