“ CFOs are focused on better informing decision-making . They do so by providing CEOs and their business partners with critical financial insights ”
BRETT MAHER PRINCIPAL , PWC
However , while P & C lines may be putting pressure on the global insurance market , rising interest rates in life and annuity ( L & A ) markets should be helping insurers ’ portfolio yields , at least in the short-to-mid-term .
Maher expands : “ When it comes to L & A , what ’ s interesting in the marketplace post- COVID-19 are the high interest rates in the US . The US Federal Reserve started raising interest rates at the start of 2022 .
“ That was good for investment portfolios , bonds and the ‘ vanilla types ’ of investments typically made by insurance companies ,” he continues . “ That ’ s because such investment income is what ’ s going to be used to pay out annuities , a death claim or a benefit associated with a policy . The benefits of those higher rates may be seen over the next several years .”
“ To find new market opportunities , companies are focusing on product customisation in both the L & A and P & C markets . Essentially , insurers are trying to figure out how to get to customers quickly – particularly millennials – through digital products or digital engagement , because that seems to be the way that younger generations want to buy .”
Innovative companies are using customer data such as telematics , internet usage or other third-party data to tailor products and services to their customers and to help achieve better underwriting results .
As Maher explains : “ There is another important driver impacting our clients . With life and annuity products tending to have longer durations than a P & C product , we have seen an increased focus from L & A insurers on capturing higher investment returns to increase profits .
50 February 2024