Inflation, geopolitical risks, and regulatory, demographic, and climatic changes keep the insurance industry in a near-constant state of transformation. The industry’s future will largely be determined by its ability to adapt to changing social and economic needs. Discussion about the challenges facing the sector took place during the “Insurance: Sales, Innovation, Risk” conference in collaboration with the consulting firm Deloitte.
In late September, the first edition of the conference organized by the Strategic Thought Center as part of the European Financial Congress took place. Over 300 insurance company representatives, brokers, agents, regulatory and supervisory institutions, academics, and public institutions attended the event. The project aims to exchange experiences concerning current trends, changing customer expectations, and analyzing opportunities and threats impacting the day-to-day operations of insurers. The conference’s Program Board, chaired by Marcin Warszewski, leader of the insurance sector at Deloitte, focused on sales, innovation, and risk-oriented topics.
During the event, participants highlighted the need for the sector to adapt to changes and actively respond to emerging risks. Threats listed included the consequences of climate change, cyberattacks, and the lack of geopolitical stability in the region. Reinsurance capacity, determined by factors such as high inflation, the need to revalue investments due to high-interest rates, increased geopolitical, or regulatory risk, also presents a significant challenge to the industry.
The conference focused on the need for innovation within the industry. Specifically, it identified the need to change the insurers’ product offerings, especially in light of demographic changes and the needs of an aging society. The need to create solutions addressing new climate risks and supporting the development of a green economy was also emphasized, necessitating cooperation and partnership with regulators and public institutions.
Experts also highlighted the significant role of the insurance sector in the Polish economy, noting its untapped potential. Compared to Western Europe countries, Poland has a significantly lower ratio of insurance penetration to GDP, particularly in the case of life insurance. The need for public education was underscored due to a large gap in insurance awareness and the related low expenditure on this subject.
“The insurance industry in Poland faces the challenge of further development. However, slowed economic growth, inflation, and a rising cost of capital do not inspire optimism. On the other hand, demographic and climatic changes present both a challenge and an opportunity for insurers to broaden their offerings and cover new insurance needs.” said Marcin Warszewski, leader of insurance practice at Deloitte.
New Technologies and Outsourcing
One trend discussed during the conference was the role of digitization, technology, and outsourcing in the insurance sector. According to the discussion participants, main advantages of technology outsourcing are cost-effectiveness, access to new competences, and speed of innovative solution implementation.
The inclination of the Polish insurance sector to use outsourcing was also deliberated during the discussion. Although opinions were divided, it was agreed that several barriers limit the willingness of insurance companies in Poland to outsource some activities. One of them is taxation: insurance services are exempt from VAT, while carrying out these processes by a non-insurer entity brings an additional fiscal burden. Another issue is the size of leading insurers who can achieve scale benefits through actions within their structures.
For these reasons, insurers’ interests lie in those areas of outsourcing where the element of innovation is most crucial, such as cloud services, data analytics, generative artificial intelligence, and cybersecurity.
