Digital transformation, climate change, consumer behaviour – opportunities and challenges in insurance
Balancing the European legislation with the growing demands of the clients, the implications of climate change, effective life insurance and development of insurtech – along other issues these were discussed in the conference “Insurance and Reinsurance in the Baltics 2018” organized by Latvian Insurers Association on 28 September, which was held for the 17th time and attracted more than 200 participants and nearly 20 speakers from more than 10 countries.
“Despite the decreasing population and different level of welfare in comparison to the Western European countries, our region sees a stable growth and a huge development potential in insurance industry – GDP is increasing, and so is the insurance market – we attract the interest of global market players,” explains the president of Latvian Insurers Association, Mr Jānis Abāšins.
Technological progress directly influences the change of consumer habits and demands towards the service provided. Previously consultations and filing of claims in presence were mostly in demand, whereas now the client wants handy online applications and distant service.
Compliance with the European legislation in the current conditions of technological progress is an equal challenge. Currently the most affecting for the clients is the implementation of Insurance Distribution Directive (IDD), which envisages provision of services that are comprehensible and honest for the consumer exactly in view of the digital transformation. One of the concerns is if instead of comprehensibility and transparency clients would not be puzzled with amounts of additional documents and information. For example, the most vital information about the product will be included in the IPID, but that does not mean that the client can skip reading the terms of the contract.
A considerable attention was paid to implications of climate change on the insurance industry. As the Chairman of Munich Climate Insurance Initiative, Prof. Dr. Dr. Peter Höppe pointed out, research shows that the climate change, which is mostly influenced by global warming and which increasingly provokes disastrous natural catastrophes, is mainly induced by humans. Even though the climate of the Baltic region is comparatively gentle towards us, we also experience floods, storms and long-lasting forest fires caused by uncharacteristic periods of heat more and more frequently.
The development of life insurance is still a significant challenge in our region. If the proportion of life and savings insurance in the Western Europe is around 60%, then in the Eastern Europe (including the Baltics) it is 30% on average. “The situation gradually improves, and people begin to realize that saving for a rainy day can begin with putting aside relatively small sums, like 30 euro. However, we cannot say that the habits have changed and giving up something today to provide for consumption in future has become a custom. And yet we are ready to spend much for motor insurance – it is well-known that the share of new and shortly-used vehicles in the Baltics is comparatively large,” concludes Jānis Abāšins.