Buy, sell, retract, invest in insurtech—a plethora of strategic dilemmas for 2019

The trend of consolidation will continue through 2019 as more companies seek efficiencies of scale and the size and breadth to compete globally. But the industry will continue to invest in insurtech ventures while also examining the books more closely than ever and withdrawing from unprofitable lines of business.

Those are the main expectations of respondents to Intelligent Insurer’s annual year-end survey of online readers designed to assess their views on the year just gone and their expectations and hopes for the next one. While the run up to the year-end renewals can be a frantic time for many in the industry, it also offers an insightful snapshot of their mindsets at this point in the year.

Respondents were asked to select two things they felt will be the most important developments for the industry in 2019. Some responded anonymously while others allowed their comments to be attributed.

Some noted that, while the challenges facing the industry in 2019 will be similar, the multiple strategic dilemmas to consider will make it a tough time to be a CEO.

“2019 will be very similar to 2018 in most ways, especially in how companies are trying to position themselves so that they have a secure future,” one respondent said.

“That means gaining size and ensuring they are on top of developments in technology. It is not easy doing everything, but that’s why CEOs can earn what they do!”

Another said: “You have to consider the pressure from investors. They want profits and growth and the share price going in the right direction—but they also want companies to be nimble and investing in technology, all while being diverse and green and solving global warming. It is no easy task.”

Other factors worrying respondents moving into next year include further loss creep from 2018 cat losses and the onward march of insurance-linked securities (ILS) and alternative capital into new lines of business—although one noted that these two things have been inextricably linked so far.

“The loss creep has actually centred around ILS funds, which underestimated losses in order to convince investors to reload. The consequences of that and how they deal with future losses will be interesting to see in 2019,” one respondent said.

New year’s resolutions
We also asked respondents to share their resolutions for 2019 with us. The responses were broad in the territory they covered—and often quite unexpected. Some wanted to retire and others yearned for a “nice long holiday on a boat”, but several expressed their concerns for action on climate change and the pollution of the sea, rivers and lakes.

If there were industry-specific themes to be devised from the responses they revolved around rates hardening and better underwriting profits. Or, as one respondent put it, “a return to the good old days”. Another added: “Treaty driving market hardening. It all starts from the top.”

Others were very specific in their answers. One respondent wants to find more opportunities outside Brazil while another wants to grow the reach of his business in Asia. There were also several comments relating to a reversal of the trend of ‘big is better’ in the industry.

“I would like to see a resurgence of the medium-sized reinsurance companies that, from digital to business, transform themselves with extending tech capabilities internally and externally for the benefit of their clients,” one said.

Finally, a growing number of executives seem a little concerned about the influence of technology on the industry—and their jobs. “My resolution is to learn to code before someone codes a bot to replace me!” one said.