State-of-the-art cyber security operations, as well as further innovating cyber insurance offerings, will see heightened focus for the industry, says Walter Poetscher, EY Oceania Insurance Leader.
Despite volatility in recent times, the Australian insurance industry is structurally attractive and recent trends are cyclical or transitional, says Walter Poetscher, EY Oceania Insurance Leader.
“In many lines of business, the resurgence of underwriting margins from strong rate increases in recent quarters bodes well for industry performance in 2023 and over the next years but claims inflation will adversely impact margins for some time.
Poetscher expects that further rate increases will be necessary in home insurance on the back of higher catastrophe losses and post-event inflation, while motor insurance will likely revert to normalised levels after Covid-19 tailwinds end and average claims size increases.
“In recent years, there’s been significant investment into technology, modernization and transformation, particularly in personal lines, revamping the customer experience, the use of data and the simplification of the business,” Poetscher explains. “Many players have invested heavily into digital and technology capabilities and are increasingly benefiting particularly well. State-of-the-art cyber security operations, as well as further innovating cyber insurance offerings, will see heightened focus, accelerated by recent cyber breaches in the market.
Acknowledging the change required and encouraged by strong results, Poetscher says “we see Australian general insurers transition to investment in modernisation of commercial lines, similarly to their global peers”.
How can commercial lines learn from the transformation experience in personal lines, whilst acknowledging the bespoke nature of solutions and distribution arrangements?
“Agility of the organisation as a whole and specifically the systems environment is critical, which requires core systems and digital front ends to work together seamlessly in an ecosystem play, so we’ll see companies more and more looking for ways to create a frictionless business and bridge their legacy technology with new, advanced systems and partnerships.”